Semiannual
Report
to
Shareholders
June 30, 1995
The Park Avenue Portfolio
o The Guardian
Park Avenue Fund
o The Guardian
Baillie Gifford
International Fund
o The Guardian
Asset Allocation Fund
o The Guardian
Investment Quality
Bond Fund
o The Guardian
Tax-Exempt Fund
o The Guardian
Cash Management Fund
[Logo]
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Guardian Investor Services Corporation
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[PHOTO]
Frank J. Jones,Ph.D.
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Dear Shareholder:
The first half of 1995 was a period of transition for both the U.S. and
global economies and financial markets.
In the U.S., during the first quarter of 1995, economic growth slowed to 2.7
percent from its rapid 5.1 percent growth during the fourth quarter of 1994.
Monetary policy continued to constrain this strength--the Federal Reserve
increased the Fed Funds rate to 6 percent on February 2, which proved to be the
last tightening in this cycle. Real growth for the second quarter, as measured
by the gross domestic product, slowed to 0.5 percent, with the economy weakening
as the second quarter progressed and the third quarter began. In fact, the very
strong bond market rally during May was based on the market's assessment that
the Fed's next move would be an imminent easing. This assessment turned out to
be correct--the Fed cut the discount rate on July 6 by 25 basis points.
The slowing economy and the expectation of Fed easing have been very
supportive of the markets during the first half of 1995. Specifically, the S&P
500 Index returned 20.11 percent and the Lehman Aggregate Bond Index returned
11.44 percent during the first six months of 1995.* During May alone, the Lehman
Aggregate returned 3.9 percent, the strongest single month by this measure since
February 1986.
The current conventional wisdom is that real economic growth will strengthen
slightly during the third quarter, before strengthening moderately to perhaps
2.0-2.5 percent during the fourth quarter. If such expectations are vindicated,
the Fed will have accomplished a "soft landing," resulting in an economy that
Goldilocks would describe as "not too hot, not too cold." But then, as John
Maynard Keynes said, "the inevitable never happens, only the impossible."
At midyear 1995, there has been considerable concern about whether the bond
and stock market rallies could continue or whether they could hold their
significant gains of the first half of the year. However, the lukewarm or
Goldilocks economic scenario just described would certainly not provide the
basis for accelerating inflation. Instead, it would be somewhat negative but not
disastrous for corporate profits and, thus, could be salutary for both the stock
and bond markets.
Abroad, the global economy also was one of moderate growth with mild
inflationary forces. The U.K. continued its central bank tightening. Germany,
while recovering from recession, exhibited slow growth and, as always, was
vigilant about any inflationary signs. The Japanese economy continues to be
extremely weak and there is an imminent threat of deflation rather than
inflation. The official Japanese interest rate is currently only 1 percent and
is projected to decrease to between 0.25 percent and 0.50 percent soon.
Consistent with their economies, the stock market returns in the U.K.,
Germany, and Japan were weak during the first six months of 1995. Although the
weak U.S. dollar made the returns in U.S. dollars significantly stronger in
these markets, the British, German, and Japanese markets still fell short of the
return on the U.S. stock market.
I invite you to read the Portfolio Manager interviews on the following pages
to learn more about the strategies used to manage your fund. The interviews
highlight fund performance during the first half of the year; however, please
keep in mind that past performance is not a guarantee of future results.
Regards,
/s/ Frank J. Jones
Frank J. Jones, Ph.D.
President, The Park Avenue Portfolio
*The S&P 500 Index is an unmanaged index that is generally considered to be
representative of U.S. stock market activity. The Lehman Aggregate Bond Index is
an unmanaged index that is generally considered to be representative of the U.S.
bond market activity. The S&P 500 Index and the Lehman Aggregate Bond Index are
not available for investment and their returns do not reflect any sales charges
which an investor may have to pay when purchasing shares of a fund.
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A Special Thanks to our Recent Retirees
The officers and directors of The Park Avenue
Portfolio and its investment adviser, Guardian
Investor Services Corporation, would like to
extend their heartfelt thanks and appreciation to
George T. Conklin, Jr., and Gerard E. Mills for a
quarter century each of distinguished service as
directors of The Guardian's mutual fund family.
Mr. Conklin, a former Chairman of the Board of The
Guardian Life Insurance Company, served as
Chairman of the Board of The Guardian's mutual
funds through his entire twenty-five years as a
director. We are fortunate to have Mr. Conklin
continuing to lend his expertise to the Board in
his new capacity as director emeritus. Mr. Mills,
a former executive with Distillers Co., Ltd., and
Gordon's Dry Gin Co., Ltd., served as Chairman of
the Audit Committee of the Board for several years
and has taken up retirement in Florida. We wish
Mr. Mills good health and happiness for years to
come.
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The Park Avenue Portfolio
Table of Contents
Portfolio Manager Interviews
The Guardian Park Avenue Fund .......................................... 2
The Guardian Baillie Gifford International Fund ........................ 6
The Guardian Asset Allocation Fund ..................................... 8
The Guardian Investment Quality Bond Fund .............................. 10
The Guardian Tax-Exempt Fund ........................................... 12
The Guardian Cash Management Fund ...................................... 14
Schedule of Investments
The Guardian Park Avenue Fund .......................................... 15
The Guardian Baillie Gifford International Fund ........................ 21
The Guardian Asset Allocation Fund ..................................... 19
The Guardian Investment Quality Bond Fund .............................. 25
The Guardian Tax-Exempt Fund ........................................... 27
The Guardian Cash Management Fund ...................................... 29
Financial Statements ...................................................... 30
Notes to Financial Statements ............................................. 38
Financial Highlights ...................................................... 48
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The Guardian Park Avenue Fund
[Photo of Charles E. Albers, Portfolio Manager]
Q. How did the Fund perform during the first six months of 1995?
A. The Guardian Park Avenue Fund performed very well during the first six months
of 1995. During this period, the Fund had a total return of 20.53 percent.* The
Fund slightly outperformed the S&P 500 Index, which had a total return of 20.11
percent.#
Of course, the longer-term results are more significant for investors who are
seeking to build wealth over time. From this perspective, The Guardian Park
Avenue Fund has also done well over longer time periods. For the five- and
ten-year periods ended June 30, 1995, average annual total returns were 15.50
percent and 15.36 percent, respectively.* As the chart below indicates, based on
total returns, for the periods ended June 30, 1995, the Fund outperformed its
Lipper peer group--the group of mutual funds with investment objectives and
policies similar to those of the Fund, over the one-, five-, and ten-year
periods. The Fund ranked in the top fifteen percent of the Lipper Growth Funds
category for both the five- and ten-year periods and in the top half for the
one-year period.+
The Guardian Park Avenue Fund beats Lipper Growth
Funds Average Annual Total Returns
for One, Five, and Ten Years
[The table below was represented as a line graph in the printed material.]
1 Year 5 Years 10 Years
------ ------- --------
The Guardian Park Avenue Fund 23.77% 15.50% 15.36%
Lipper Growth Funds Category 22.14% 11.22% 13.01%
Q. What strategies did you use during
this period?
A. For many years, our fundamental strategic approach to portfolio management
has been a hybrid: It combines a quantitative stock selection system as well as
fundamental judgments about the market sectors and individual securities.
Together these two elements work in a synergistic fashion. It is a "top-down
plus bottom-up" approach. Portfolio manager judgment comes into play from the
top down, making the strategic positioning decisions for the Fund's portfolio,
while the stock scoring system helps identify individual securities in the
particular sectors that the portfolio manager has selected. Let me explain a
little bit more.
Our proprietary stock scoring system, which we have been continuously
developing and refining since 1972, helps us locate attractive stocks. We follow
a universe of approximately 1,300 stocks and create a score for each stock
weekly. Using the stock's score, we determine the relative attractiveness of
buying, holding, and selling each security in our portfolio. The other essential
element of our process is portfolio manager judgment. This comes into play as
the portfolio manager, among other things, determines the portfolio allocation
between large-cap and small-cap segments of the market; determines the portfolio
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*Total return figures shown are historical and assume the reinvestment of
dividends and distributions and the deduction of all Fund expenses. Total return
figures do not take into account any sales charges that an investor may incur
when purchasing shares of the Fund.
#The S&P 500 Index is an unmanaged index that is generally considered to be
representative of U.S. stock market activity. The S&P 500 Index is not available
for investment and its returns do not reflect any sales charges which an
investor may have to pay when purchasing shares of a fund.
+Lipper rankings were reported in Lipper's Mutual Funds Performance Analysis
Special Report, 2nd Quarter 1995. Rankings for the periods ended June 30, 1995
illustrate the Fund vs. other growth funds in the specified period. The Fund
ranked 18 out of a field of 145 growth funds over a ten-year period, 26 out of
230 for the five-year period and 203 out of 516 for the one-year period. Lipper
rankings are based on total return and do not take into account any deductions
for sales loads.
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2
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allocation between different economic sectors, such as energy, financial,
technology, etc.; and develops procedures to guide portfolio rebalancing.
Both aspects of our approach contributed to our good relative investment
performance during the first half of 1995. In general, the stock scoring system
successfully distinguished the better and poorer performing stocks. Although all
areas of the stock market did well this half of the year (even the stocks in our
bottom-ranked quintile had an average gain of 14.9 percent), the stocks that
were ranked in our top quintile showed an average gain of 20.4 percent. The
stock scoring system was clearly a valuable tool that enhanced portfolio
performance during this period.
The portfolio manager's judgment also contributed to the above-average
results. Our judgment on major issues during this period was pretty good. For
example, the Fund was substantially overweighted in technology during the
period, and it was the best performing sector of the twelve which we monitor. At
the same time, the portfolio was substantially under-weighted in utility company
shares, and that sector substantially underperformed in the market. Also, during
the first quarter of 1995, we surmised that the continuing decline in the
external value of the U.S. dollar would be an important stimulant for the shares
of U.S. companies with sizable global exposure. As a result, we moved a
significant portion of the portfolio into shares of these companies, which were
generally large-cap companies in either the technology or consumer nondurable
sectors. The move turned out very favorably, as many of those stocks were market
leaders during the balance of the first half of the year. We believe the theme
of large-cap growth-type companies leading the market is likely to continue
through the balance of 1995 and we will continue to move the portfolio in this
direction.
Q. What is your outlook on the economy?
A. The Federal Reserve has attempted to engineer a "soft landing" of the U.S.
economy in 1995, in order to contain inflationary pressures. At this point, it
appears that they have been generally successful. By "soft-landing," we mean two
or more successive quarters where real gross domestic product grows at less than
a two-percent rate and where a recession is avoided. Currently, it appears that
somewhat more rapid growth may resume in the fourth quarter of 1995 and continue
into 1996.
Looking forward for the next five years, we believe that two major areas of
growth stand out: first, high-tech capital equipment including exports of
high-tech capital goods; and second, consumer spending on healthcare, travel,
and recreation.
Q. What about the stock market?
A. Prospects for further stock market gains in the years ahead seem promising.
As the generation of "baby-boomers" ages, and their retirement financing needs
become more clear to them, the flow of money into the stock market seems likely
to increase. This investing may take many forms: direct, mutual funds, 401(k)
plans, pension plans, etc. Corporate stock buy-backs have also become an
important driving force in the marketplace, and the flow of funds from outside
the U.S. seems likely to increase. When you combine these factors with the
effects of an accommodating monetary policy and a reasonable level of stock
valuation, we believe that the basic conditions exist for potentially continuing
the bullish stock market.
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3
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The Guardian Park Avenue Fund Profile
Objective: Long-term growth of capital
--------------------------------------------
Portfolio: At least 80% common stocks and
securities convertible into
common stocks
--------------------------------------------
Inception: 6/1/72
--------------------------------------------
Net Assets at June 30, 1995: $820,272,305
--------------------------------------------
"Some portfolio managers try to get the market to conform to their theories.
We believe it is more fruitful to simply perceive the 'way of the universe,' and
then get ourselves--and our portfolio--aligned with it."
-- Charles E. Albers
Comparison of Common Stocks Held by the Fund and the S&P 500 by Economic Sector
The two sectors where the Fund had a significant overweighting versus the S&P
500 were technology and basic industry. The overweighting in technology was an
important aid to performance in the first half of 1995.
[The tables below were represented as pie graphs in the printed material.]
The Guardian
Park Avenue Fund
----------------
Utilities - 0.08%
Other - 15.69%
Financial - 13.10%
Consumer Staples - 8.61%
Energy - 12.14%
Technology - 28.02%
Basic Industries - 15.58%
Capital Goods - 6.78%
S&P 500
-------
Utilities - 11.71%
Other - 17.78%
Consumer Staples - 20.94%
Energy - 9.95%
Technology - 15.52%
Financial - 11.45%
Basic Industries - 7.21%
Capital Goods - 5.44%
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Portfolio Composition
The Guardian Park Avenue Fund portfolio holds approximately 250 securities in
a variety of economic sectors. The portfolio manager's goal is to position the
portfolio for consistent performance in both "bull" and "bear" markets.
[The table below was represented as a pie graph in the printed material.]
Fixed Income (Including Convertibles) 1.3%
Cash & Cash Equivalents 7.6%
Common Stocks 91.1%
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Growth of a Hypothetical Investment
[The table below was represented as a line graph in the printed document.]
The Guardian
Park Avenue S&P 500 Consumer Price
Fund Index Index
------------ ---------- --------------
Jun-72 $9,352.32 $9,791.00 $10,072.46
Jun-73 $7,757.72 $9,801.92 $10,676.33
Jun-74 $8,094.75 $8,376.17 $11,835.75
Jun-75 $10,222.18 $9,724.17 $12,922.71
Jun-76 $12,926.28 $11,077.06 $13,695.65
Jun-77 $15,548.55 $11,106.53 $14,613.53
Jun-78 $17,952.63 $11,100.41 $15,700.48
Jun-79 $20,459.31 $12,582.63 $17,439.61
Jun-80 $24,637.29 $14,721.83 $19,927.54
Jun-81 $30,553.08 $17,725.62 $21,859.90
Jun-82 $28,221.25 $15,681.66 $23,429.95
Jun-83 $49,604.02 $25,228.07 $24,009.66
Jun-84 $47,823.05 $24,027.87 $25,048.31
Jun-85 $55,012.85 $31,410.25 $25,966.18
Jun-86 $93,553.20 $42,591.68 $26,425.12
Jun-87 $104,621.96 $53,271.67 $27,439.61
Jun-88 $107,311.97 $49,514.75 $28,502.42
Jun-89 $124,277.43 $59,545.64 $29,975.85
Jun-90 $131,990.46 $69,210.91 $31,400.97
Jun-91 $136,860.25 $74,303.05 $32,874.40
Jun-92 $159,469.47 $84,210.21 $33,888.89
Jun-93 $215,651.58 $95,619.29 $34,879.23
Jun-94 $219,203.63 $96,936.39 $35,772.95
Jun-95 $271,285.18 $122,052.06 $36,884.06
A hypothetical $10,000 investment made at the inception of The Guardian Park
Avenue Fund on June 1, 1972, would have grown to $271,285 on June 30, 1995. This
represents a total return of 2,613 percent! We compare our performance to that
of the S&P 500, which is an unmanaged index that is generally considered the
performance benchmark of the U.S. stock market. The starting point for the Fund
of $9,550 reflects its initial sales charge of 4.5 percent. The starting point
for the S&P 500 Index of $10,000 does not reflect a sales charge. While you may
not invest directly in the S&P 500 Index, a similar hypothetical investment
would have had a total return of 1,121 percent and would now be worth $122,052.
The cost-of-living index, as measured by the consumer price index, which is
generally representative of the level of U.S. inflation, is also provided to
lend a more complete understanding of the investment's real worth.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Average Annual Returns for Periods Ended 6/30/95
Life of Fund
1 Year 5 Years 10 Years (since 6/1/72)
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Guardian Park Avenue Fund (without 4.5% sales charge) 23.77% 15.50% 15.36% 15.60%
-------------------------------------------------------------------------------------------------------------
Guardian Park Avenue Fund (incl. 4.5% sales charge) 18.20% 14.44% 14.83% 15.37%
-------------------------------------------------------------------------------------------------------------
S&P 500 Index 25.93% 12.02% 14.54% 11.45%
-------------------------------------------------------------------------------------------------------------
</TABLE>
These figures represent past performance and are no guarantee of future
results. Investment return and principal value will fluctuate and redemption
value may be more or less than original cost.
Total return figures are historical and assume the reinvestment of dividends
and distributions and the deduction of all fund expenses and the current maximum
sales charge of 4.5 percent except where noted. Prior to August 25, 1988, shares
of the Fund were offered at a higher sales charge, so actual returns would have
been somewhat lower.
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The Guardian Baillie Gifford International Fund
[Photo of R. Robin Menzies, Portfolio Manager]
Q. We have all heard about the drop in the U.S. dollar. How has that affected
the international securities markets?
A. The clearest impact of the dollar's decline is that it has inflated the
returns from overseas investments. But if you look at the performance of
overseas markets in local terms, many of the overseas markets now appear
reasonably priced compared with the U.S. For example, the German market has
hardly risen at all and the Japa-nese market has fallen sharply.
However, many overseas markets have not yet reflected the strong growth in
local earnings because interest rates overseas are still quite high (with the
exception of Japan). Since there is still considerable room for interest rates
to fall in overseas markets (and low interest rates are generally good for stock
markets), stocks in these markets present a potentially good value. We believe
that the next six months will be positive for investors in overseas markets in
general.
Q. What factors and strategies affected the Fund's performance over the past six
months?
A. The Fund had a total return for the six-month period ended June 30 of 1.24
percent.* Our benchmark index, the Morgan Stanley Europe, Australia, and the Far
East (EAFE) Index had a return of 2.76 percent for the same period.# Japan had a
tough six months, with its stock market returning -8.2 percent in dollar terms
(-21.9 percent in yen). Correspondingly, our holdings in Japan (approximately
27.8 percent of the portfolio) retarded Fund performance. Fortunately, the other
Asian markets, where we have a sizable exposure, have done much better, as have
some European ones, especially on the Continent.
The Fund has had a strategy of hedging some of its exposure in yen in order
to protect U.S. investors from the effects of a decline in the highly valued
Japanese currency. This insurance policy was a costly one for most of the past
six months, as the yen continued to appreciate, but more recently the dollar has
been a little stronger and, currently, our hedges are profitable.
As regards individual stocks, we have continued to concentrate on
high-quality growth stocks which we buy and hold after in-depth research.
Examples of these include: some of the lightly regulated British utilities, such
as National Power, which are growing their dividends rapidly; Lufthansa, the
German airline whose freight and passenger business is booming and whose
management has improved enormously since privatization; and companies with
exposure to the rapidly growing economies of the Far East, such as Thailand's
Industrial Finance Company, whose shares have already risen by nearly 26 percent
this year.
Q. Are there any political or demographic factors that are making certain
countries or regions particularly attractive?
A. We are still impressed by the smaller Asian economies, several of which, such
as Malaysia and Thailand, are achieving real growth rates of 7 to 10 percent --
and look set to continue to do so.
We are impressed by the core hard-currency countries of Europe such as
Germany and Holland. There are many strong companies based in these countries,
and interest rates are likely to fall over the next few months.
The British market is also looking quite attractive; its valuation has been
depressed by overblown political concerns but earnings growth is still strong.
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* Total return figures assume the reinvestment of dividends and distributions
and do not include the current maximum sales charge of 4.5 percent. Returns
represent past performance and are not a guarantee of future results. An
investor's investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost.
# The Morgan Stanley EAFE Index is a leading unmanaged index of international
stocks. It is capitalization-weighted and carries a significantly higher
weighting (50 percent plus) in Japan than the Fund is normally likely to have
because the Fund seeks to diversify investments across all major
international markets. The performance of the Fund and EAFE may not therefore
always correlate closely. The EAFE is not available for investment and its
returns do not reflect any sales charges which an investor may have to pay
when purchasing shares of a fund.
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Though the Japanese market remains very highly rated, its valuations are now
back to what are, for Japan, normal levels after the excesses of the "bubble
economy" period from 1985 to 1989 when prices rose out of control. Japan's
economic recovery is continually deterred by the strength of the yen, but
exporters, amazingly, seem to be slowly adjusting to this tough situation. It is
also encouraging that Japanese banks are finally recognizing their bad debt
problems. Compared to our benchmark, we have a relatively low weighting in Japan
at present; our next move will probably be to increase it.
The political wild card among the major markets is probably France. The
recently elected President Chirac is far less of a hawk on interest rates and is
less concerned about the strength of the franc. He is likely to cut interest
rates more over the next few months, and the French market should begin to show
a positive response to this.
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The Guardian Baillie Gifford International Fund Profile
Objective: Long-term capital appreciation
-----------------------------------------------------
Portfolio: At least 80% in a diversified portfolio
of common stocks of companies
outside of the United States
-----------------------------------------------------
Inception: 2/15/93
-----------------------------------------------------
Net Assets at June 30, 1995: $41,395,132
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"Most overseas markets have lagged behind the U.S. this year--at some point
we believe they will start to catch up. We think that point is quite close."
-- R. Robin Menzies
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Access to equity markets worldwide?
Many foreign markets have outperformed the U.S. market over the past ten
years. In today's market environment, an investor with a well-chosen mix of
domestic and foreign investments may experience higher overall returns than an
investor holding only U.S. investments. International funds such as The Guardian
Baillie Gifford International Fund allow you to take advantage of many long-term
growth opportunities that exist beyond U.S. borders.
[The table below was represented as a pie graph in the printed material.]
-----------------------------------------
World Equity Markets
as of January 1995
U.S. Market - 34%
International Markets - 66%
Wall Street Journal, 4/5/95
-----------------------------------------
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Diversifying your portfolio internationally may lower your overall portfolio
risk as well as increase your investment returns. The Guardian Baillie Gifford
International Fund seeks to provide the opportunity to counterbalance swings in
the U.S. stock market because long-term data show a relatively low correlation
between the performance of the U.S. stock market and the performance of
collective international markets.
[The table below was represented as a pie graph in the printed material.]
-----------------------------------------
Composition by Geographic Allocation
as of 6/30/95
Latin America - 2.3%
Cash & Deposits - 4.0%
Asia (except Japan) - 17.6%
Europe - 29.3%
U.K.- 19.0%
Japan - 27.8%
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The Guardian Asset Allocation Fund
[Photo of Frank J. Jones, Co-Portfolio Manager and Jonathan C. Jankus,
Co-Portfolio Manager]
Q. How did the Fund perform during the first six months of 1995?
A. The Fund's total return for the six months ended June 30, 1995 was 14.37
percent.* This compares with a return of 20.11 percent for the S&P 500 Index and
a return of 11.44 percent for the Lehman Aggregate Bond Index.# The Fund's
theoretical composite benchmark, which consists of 60 percent of the S&P 500
Index and 40 percent of the Lehman Aggregate Bond Index, thus would have
generated a return of 16.70 percent. During this same time period, other asset
allocation funds produced an average return of 12.48 percent, according to
Morningstar, an independent mutual funds monitor.+
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* Total return figures are historical and assume the reinvestment of dividends
and distributions and do not include the current maximum sales charge of
4.5%. Returns represent past performance and are not a guarantee of future
results. An investor's investment return and principal value will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
the original cost.
# The S&P 500 Index is an unmanaged index that is generally considered to be
representative of U.S. stock market activity. The Lehman Aggregate Bond Index
is an unmanaged index that is generally considered to be representative of
U.S. bond market activity. The S&P 500 Index and the Lehman Aggregate Bond
Index are not available for investment and their returns do not reflect any
sales charges which an investor may have to pay when purchasing shares of a
fund.
+ Morningstar is an independent mutual fund rating service and its database of
performance information is based on historical total returns, which assume
the reinvestment of dividends and distributions, and the deduction of all
fund expenses. Morningstar returns do not reflect the deduction of sales
loads, and performance would be different if sales loads were deducted. Past
performance is not a guarantee of future results.
Q. How has the behavior of the economy and the financial markets affected the
Fund's performance?
A. The Fund performed well relative to its competitors (other asset allocation
funds with objectives and policies similar to the Fund) by outperforming over
two-thirds of them during the first half of the year. According to Morningstar,
for the six-month period ended June 30, 1995, the Fund ranked 48 out of the 160
similar funds it tracks. The Fund's underperformance, however, relative to its
theoretical benchmark, can be explained in one word: cash. When both the stock
and bond asset classes delivered double-digit returns over a six-month period,
it could be considered a mistake (after the fact) to have held any defensive
positions in cash and money market instruments. As the bond markets rose higher
and higher (with bond yields falling almost one percent in May alone), our
strategy essentially viewed bonds as being more and more expensive. This
situation made both equities and cash appear to be superior alternatives once we
adjusted for risk. While our disciplined, systematic strategy was correct to
overweight stocks, it was an error to underweight bonds and to allocate a
portion of the portfolio to safe but relatively low-yielding money market
instruments.
Q. What is your outlook going forward?
A. As of June 30, our target portfolio weights are 65 percent stocks, 10 percent
bonds, and 25 percent cash. Relative to our neutral benchmark position (60
percent stocks, 40 percent bonds, and 0 percent cash), we therefore will
continue to be overweighted in stocks (albeit only modestly) and underweighted
in bonds. While we continue our overweighting in cash, we believe that during
the next six months it will prove to be advantageous to the Fund.
While this has been a good year for stocks, we do not find the market's
actions excessive. In fact, over the past five years, the average annual return
on the S&P 500 has been 12.09 percent. By contrast, the average annual return of
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8
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the S&P 500 over the past fifty years has been 12.02 percent, so we are hardly
in uncharted waters. What constitutes excess? One might want to consider the
five years ending with July of 1987; over that period, the S&P 500 compounded at
an annualized rate of 29.72 percent. And in contrast to 1995, that was in the
face of a declining bond rate. At the moment, such excesses are not apparent.
Danger signs to watch for would be a deteriorating bond market or a lowering of
long-term profit trends.
We continue to believe that, over long periods of time, superior returns are
generated by disciplined adherence to our strategy, which systematically weighs
the risk/return trade-offs between alternative investment classes. This analysis
must be done in the context of observable quantitative measures (versus more
subjective considerations) which lead to clear portfolio actions. This sometimes
requires us to act (as now) contrary to "the crowd." We are quite comfortable in
that position, since, to a great extent, we seek to exploit the relative value
opportunities created by the occasional excesses of a crowd mentality. During
this period, "the crowd" was buying bonds while we maintained a conservative
stance and grew our cash position.
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The Guardian Asset Allocation Fund Profile
Objective: Long-term total investment return
consistent with moderate risk
-------------------------------------------------
Portfolio: A mixture of common stocks and
convertible securities; investment
grade debt obligations and U.S.
government securities; and money
market instruments
-------------------------------------------------
Inception: 2/15/93
-------------------------------------------------
Net Assets at June 30, 1995: $61,301,557
-------------------------------------------------
"The key to long-term wealth-building is discipline."
-- Jonathan C. Jankus
[The table below was represented as a pie graph in the printed material.]
Fund Allocation as of June 30, 1995
Bonds 11.0%
Cash & Cash Equivalents 23.7%
Stocks 65.3%
The objective of the portfolio managers of The Guardian Asset Allocation Fund
is to outperform, over long periods of time, a hypothetical composite of 60
percent stocks (as measured by the S&P 500 Index) and 40 percent bonds (as
measured by the Lehman Aggregate Bond Index). To reach this objective, The
Guardian Asset Allocation Fund uses a theoretical model that takes into account
a variety of macroeconomic factors in order to determine the relative
attractiveness of the asset classes under consideration (stocks, bonds, and
cash). Our portfolio is adjusted according to the outputs of the model.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Average Annual Returns for Periods Ended 6/15/95
Life of Fund
1 Year (since 2/15/93)
-------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Guardian Asset Allocation Fund (without 4.5% sales charge) 17.73% 10.08%
-------------------------------------------------------------------------------------------------------------
Guardian Asset Allocation Fund (incl. 4.5% sales charge) 12.43% 7.97%
--------------------------------------------------------------------------------------------------------------
S&P 500 Index 25.93% 11.98%
--------------------------------------------------------------------------------------------------------------
Lehman Aggregate Bond Index 12.55% 6.46%
--------------------------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
9
<PAGE>
--------------------------------------------------------------------------------
The Guardian Investment Quality Bond Fund
[Photo of Michele S. Babakian, Portfolio Manager]
Q. How was overall bond market performance during the first six months of 1995?
Were there specific sectors that did better than others?
A. The bond market performed extremely well in the first half of 1995 with the
Lehman Aggregate Bond Index producing an 11.44 percent return.* The Index's
return is made up of the returns of various types of fixed income securities
with each sector class providing the following returns: 11.21 percent on
Treasury and agency securities, 13.80 percent on corporate bonds, 10.73 percent
on mortgage-backed securities, and 8.14 percent on asset-backed securities.
Corporate bonds obviously outperformed all other sectors of the fixed income
market. This occurred despite narrow yield spreads to the Treasury curve.
Investor demand and low supply in the first quarter caused spreads to continue
to narrow to historically tight levels. In the second quarter, an increase in
the number of new issues caused spreads to widen. Nonetheless, new corporates
continued to be aggressively purchased.
Q. How did the Fund perform in this environment?
A. The Fund had a total return of 10.23 percent for the six-month period ending
June 30, 1995.# The chart below compares the composition of the Fund to the
Lehman Aggregate Bond Index at June 30, 1995.
[The table below was represented as a pie graph in the printed material.]
--------------------------------------------------------------------------------
The Guardian IQ Bond Fund Lehman Aggregate Bond Index
------------------------- ---------------------------
Treasury & Agency 25.2% 54.2%
Corporate 21.0% 16.7%
Mortgage-backed 34.0% 28.0%
Asset-backed 7.8% 1.1%
Cash 12.0% 0.0%
--------------------------------------------------------------------------------
The main sector that caused the Fund to lag behind the Index's year-to-date
return was the mortgage-backed sector. Interest rate volatility increased
significantly in the second quarter causing mortgage prices to lag behind the
performance of other fixed-income sectors. Our comparatively heavy allocation to
this sector is being maintained into the third quarter, however, as volatility
is expected to drop.
Q. What has been your investment strategy so far this year and will you continue
it during the next period?
A. During the first quarter, we maintained a relatively large cash position
until a low growth/ inflation trend was confirmed. This more defensive posture
included a higher allocation to Treasury securities and short-term asset-backed
securities. As the bond market rally continued, we became more bullish on the
market and extended the duration of the portfolio from being shorter than that
of the Lehman Aggregate Bond Index to a duration on June 30 of 5.0 years, which
was .23 years longer than the Index. The steepening of the yield curve and
expectation of a Federal Reserve easing of rates prompted us to purchase more
assets in the shorter end of the curve. After reaching 46.2 percent at the end
of January 1995, the Fund's total Treasury and agency position has since been
pared down to 25.2 percent on June 30, 1995, while net purchases of higher
yielding corporate securities and mortgage pass-throughs have increased.
--------------------------------------------------------------------------------
* The Lehman Aggregate Bond Index is an unmanaged index that is generally
considered to be representative of U.S. bond market activity. The Lehman
Aggregate Bond Index is not available for investment and its returns do not
reflect any sales charges which an investor may have to pay when purchasing
shares of a fund.
# Total return figures assume the reinvestment of dividends and distributions
and do not include the current maximum sales charge of 4.5%. Since October
21, 1994, the investment adviser for the Fund has been assuming the operating
expenses of the Fund to the extent they exceed .75% of the Fund's average
daily net assets. Without these reimbursements, the performance figures would
be lower. Returns represent past performance and are not a guarantee of
future results. An investor's investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than the original cost.
--------------------------------------------------------------------------------
10
<PAGE>
--------------------------------------------------------------------------------
Q. What is your outlook on the economy?
A. The final two quarters of 1995 are expected to exhibit more stability in
yields as well as lower volatility levels. There may be mixed economic growth
statistics and inflation data, but recent economic forecasts project that gross
domestic product figures for the third and fourth quarters should come in at
around 1.5 percent and 2.7 percent, respectively, with the annual consumer price
index rate, a rate that is used as a measure of inflation, expected to be
approximately 3.0 to 3.5 percent.
Unlike the first half of 1995 when the major calamities of the collapse of
emerging markets, the Mexican debt crisis, and depreciation of the dollar
occurred, the second half should exhibit more stability. Emerging markets have
recovered, the dollar has regained some of its strength and our domestic budget
process should be bullish for the market.
With the expected stabilizing of the U.S. and global financial markets and
with moderate gross domestic product growth, we believe that we can look forward
to continued positive returns.
"We expect that volatility in the mortgage market should decrease in the third
and fourth quarters from the high levels of the second quarter, causing better
total returns for this sector."
-- Michele S. Babakian
--------------------------------------------------------------------------------
The Guardian Investment Quality Bond Fund Profile
Objective: A high level of current income and
capital appreciation without undue
risk
---------------------------------------------------
Portfolio: At least 80% investment-grade bonds
and U.S. government securities
---------------------------------------------------
Inception: 2/16/93
---------------------------------------------------
Net Assets at June 30, 1995: $52,556,240
---------------------------------------------------
Effective SEC 30-Day Yield
(as of June 30, 1995): 5.62%
[The table below was represented as a pie graph in the printed material.]
--------------------------------------------------------------------------------
S&P's Credit Ratings as of June 30, 1995
Nonrated 3.4%
Other 12.0%
AAA 63.6%
BBB 14.1%
A 6.9%
--------------------------------------------------------------------------------
The Guardian Investment Quality Bond Fund manages credit risk by investing at
least 80 percent of its assets in investment-grade bonds rated in the four
highest categories by Standard & Poor's or Moody's Investors Service.
[The table below was represented as a pie graph in the printed material.]
--------------------------------------------------------------------------------
Portfolio Composition
Cash & Cash Equivalents - 12.0%
U.S. Govts. & Agencies - 25.2%
Mortgages (multi-class) - 28.7%
Mortgages (pass-throughs) - 5.3%
Asset-backed - 7.8%
Corporate Bonds - 21.0%
The Guardian Investment Quality Bond Fund can help smooth out the market
fluctuations in your overall portfolio because bond prices do not generally move
in step with stock prices. And although money market securities can provide less
risk to principal, bonds generally provide higher income.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
11
<PAGE>
--------------------------------------------------------------------------------
The Guardian Tax-Exempt Fund
[Photo of Alexander M. Grant, Jr., Portfolio Manager]
Q. Can you give a general overview of the tax-exempt market?
A. With the Republicans pushing for increased tax cuts and the default of Orange
County, California, the tax-exempt market has been volatile, to say the least.
With each new tax reduction proposal, whether it is a flat tax or value-added
tax, the municipal bond market experiences a little more volatility. Although,
as of this writing, nothing has been legislated, any serious mention of a tax
decrease serves to potentially upset the tax-exempt market.
Certainly, the most important event to affect the tax-exempt municipal market
in early 1995 was the default of Orange County, California. Although this
particular default initially had some negative impact on the municipal market,
the market soon recovered. Most of the negative impact on municipals was
confined to Southern California issues which are trading cheaper than they
should, simply because of geographical location. So far, there has been no
impact on the Fund because of the Orange County default.
--------------------------------------------------------------------------------
* Total return figures assume the reinvestment of dividends and distributions
and do not include the current maximum sales charge of 4.5 percent. Since
June 1, 1994, the investment adviser for the Fund has been assuming the
operating expenses of the Fund to the extent they exceed .75% of the Fund's
average daily net assets. Without these expense reimbursements, the
performance figures would have been lower. Returns represent past performance
and are not a guarantee of future results. An investor's investment return
and principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than the original cost.
# The Lehman Municipal Bond Index is an unmanaged index which is generally
considered to be representative of U.S. municipal bond market activity. The
Lehman Municipal Bond Index is not available for investment and its returns
do not reflect anysales charges which an investor may have to pay when
purchasing shares of a fund.
All in all, the tax-exempt municipal market has weathered a rocky first six
months with more turbulence expected in the near future, especially with new tax
proposals and the continuing saga of Orange County's default.
Q. How did the Guardian Tax-Exempt Fund perform in the first half of 1995?
A. The Fund produced a total return of 7.23 percent for the six-month period
ended June 30, 1995, and a 6.41 percent for the preceding twelve-month period.*
The Lehman Municipal Bond Index produced a total return of 9.65 percent for the
six months ended June 30, 1995, and a 8.82 percent for a twelve-month period.#
We believe that the Fund underperformed its benchmark index, The Lehman
Municipal Bond Index, for the year because the Fund contains proportionately
more high-quality issues of longer duration than the Index. Generally, the yield
is lower on such higher-quality issues. While these higher- quality issues did
not perform well in the volatile market in 1995, we believe that this prudent
focus can potentially benefit shareholders over the long term.
Q. Did any events have a large impact on the Fund in the past six months?
A. The threat of a flat tax has made investors cautious. Investors fear that a
flat tax could make municipal bonds (which are currently tax-exempt) taxable,
thereby eliminating their potential benefit. If a flat tax were enacted, a
general obligation bond from, say, the City of New York, would then have to
compete with a bond from any major corporation. This fear had a negative impact
on the municipal bond market by raising prices and thereby lowering yields.
The Fund's relative smallness, which can be explained by its relative
newness, also hurt its performance. The Fund's smaller asset base limits its
buying opportunities and heightens the impact of expenses on its results. Thus,
we are happy to report that operating expenses in excess of 0.75 percent of the
Fund's average daily balance are being voluntarily subsidized by the Fund's
adviser, Guardian Investor Services Corporation, through December 31, 1995. We
--------------------------------------------------------------------------------
12
<PAGE>
--------------------------------------------------------------------------------
hope that this will help improve the Fund's overall performance and attract new
investors to the Fund. This voluntary subsidy of expenses may be modified or
terminated at any time after December 31, 1995, which would reduce performance.
Q. What has been the Fund's strategy during the first half of 1995? What will be
its future strategy?
A. The Fund tends to buy only high-quality tax-exempt bonds. Throughout the
period, the average Moody's or S&P credit rating for the portfolio was Aa. We
will continue to buy investment-grade debt because, in this current climate, we
do not believe that buying lower-quality bonds will increase our yields
sufficiently to compensate for the higher risks associated with lower-quality
issues.
We continued to concentrate purchases for the Fund's portfolio in state and
county general obligation bonds and revenue bonds. These municipal obligations
provide high quality and liquidity.
Because counties and states have the power to tax, their bonds present less
credit risk than other municipal obligations. To achieve a higher yield
potential with lower relative risk, we purchase bonds within a maturity range of
ten to fifteen years. We also seek to invest in bonds offering high coupons,
which should provide our shareholders with higher interest payments, thereby
generating more income that is free from federal income taxes. Some income may
be subject to state and local taxes and, for some investors, the federal
alternative minimum tax.
"In today's complex tax-exempt municipal bond markets, we believe that the value
is in quality."
-- Alexander M. Grant, Jr.
--------------------------------------------------------------------------------
The Guardian Tax-Exempt Fund Profile
Objective: Maximum current income exempt
from federal taxes
------------------------------------------------
Portfolio: At least 80% in intermediate and
long-term investment grade
municipal obligations
------------------------------------------------
Inception: 2/16/93
------------------------------------------------
Net Assets at June 30, 1995: $16,730,414
------------------------------------------------
Effective SEC 30-Day Yield
(as of June 30, 1995): 4.62%
[The table below was represented as a pie graph in the printed material.]
--------------------------------------------------------------------------------
Cash & Cash Equivalents 7.2%
Aaa 31.9%
A 18.4%
Aa 42.5%
--------------------------------------------------------------------------------
The Guardian Tax-Exempt Fund seeks to maximize current income exempt from
federal income taxes, consistent with preservation of capital, by investing
primarily in intermediate and long-term investment grade categories, as
determined by independent rating agencies such as Standard & Poor's and Moody's
Investors Service.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Average Annual Returns for Periods Ended 6/30/95*
Life of Fund
1 Year (since 2/16/93)
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Guardian Tax-Exempt Fund (without 4.5% sales charge) 6.41% 1.86%
--------------------------------------------------------------------------------------------------------------
Guardian Tax-Exempt Fund (incl. 4.5% sales charge) 1.62% -0.10%
--------------------------------------------------------------------------------------------------------------
Lehman Municipal Bond 8.82% 5.72%
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
* Since June 1, 1994, the investment adviser for the Fund has been assuming the
operating expenses of the Fund to the extent they exceed .75% of the Fund's
average daily net assets. Without these expense reimbursements, the
performance figures would have been lower.
--------------------------------------------------------------------------------
13
<PAGE>
--------------------------------------------------------------------------------
The Guardian Cash Management Fund
[Photo of Alexander M. Grant, Jr., Portfolio Manager]
Q. How did The Guardian Cash Management Fund perform during the first six months
of 1995?
A. As of June 30, 1995, the current 7-day yield for the Guardian Cash Management
Fund was 5.17 percent and the effective 7-day yield was 5.30 percent. The Fund
produced an annualized total return of 5.21 percent through June 30, 1995.*
Q. What was your investment strategy during this period?
A. As always, our investment strategy was to seek high current income along with
maximum safety by investing in a diversified portfolio of money market
instruments that, according to our criteria, we believe present minimal credit
risks. During the first half of 1995, the Fund only purchased securities from
issuers that had received ratings in the highest credit quality categories
established by nationally recognized statistical ratings organizations such as
Moody's and/or Standard and Poor's. Most of the portfolio (95.2 percent) was
invested in commercial paper; the balance (4.8 percent) was invested in
repurchase agreements.
Q. What factors affected the Fund's performance?
A. Our standard policy is to maintain the Fund's "average days to maturity" in
the short range. In the first half of 1995, this policy allowed the Fund to take
advantage of the higher yields which market volatility caused to become
available in the types of securities typically purchased by the Fund.
"A money market fund is an easy and convenient way to invest excess cash."
-- Alexander M. Grant, Jr.
--------------------------------------------------------------------------------
The Guardian Cash Management Fund Profile
Objective: As high a level of current income as
is consistent with liquidity and
preservation of capital
--------------------------------------------------
Portfolio: Short-term money market instruments
--------------------------------------------------
Inception: 11/3/82
--------------------------------------------------
Net Assets at June 30, 1995: $67,631,587
--------------------------------------------------------------------------------
Investments in the Fund are neither insured nor guaranteed by the U.S.
government. While the Fund seeks to maintain a stable price of $1.00 per share,
there is no assurance that it will be able to do so.
*Yields are annualized historical figures. Effective yield assumes reinvested
income. Yields will vary as interest rates change. The Fund's results reflect
the effects of the investment adviser's assumptions of a portion of the Fund's
operating expenses. Currently the adviser is assuming operating expenses to the
extent they exceed .85 percent of the Fund's average daily assets. Without this
expense reimbursement, performance figures would be lower.
--------------------------------------------------------------------------------
14
<PAGE>
Schedule of Investments
June 30, 1995 (Unaudited)
o The Guardian Park Avenue Fund
--------------------------------------------------------------------------------
Common Stocks -- 91.5%
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
Aerospace and Defense -- 4.7%
59,000 Litton Industries, Inc. $ 2,175,625
36,400 Lockheed Martin Corp. 2,297,750
93,800 Logicon, Inc. 4,174,100
9,000 Loral Corp. 465,750
231,000 McDonnell Douglas Corp. 17,729,250
93,950 Precision Castparts Corp. 3,299,994
155,000 Rockwell Int'l. Corp. 7,091,250
46,100 Thiokol Corp. 1,394,525
------------
38,628,244
--------------------------------------------------------------------------------
Appliance and Furniture -- 0.2%
117,400 Maytag Corp. 1,878,400
--------------------------------------------------------------------------------
Automotive -- 0.8%
24,000 Borg Warner Automotive, Inc. 684,000
161,000 Echlin, Inc. 5,594,750
------------
6,278,750
--------------------------------------------------------------------------------
Broadcasting -- 1.3%
18,415 CBS, Inc. 1,233,805
92,000 Capital Cities, ABC, Inc. 9,936,000
------------
11,169,805
--------------------------------------------------------------------------------
Building Materials -- 0.3%
42,700 Coachmen Industries, Inc. 651,175
10,100 MCI Building Systems, Inc. 169,175
30,000 McGrath Rent Corp. 525,000
38,000 Del Webb Corp. 883,500
------------
2,228,850
--------------------------------------------------------------------------------
Business Services -- 1.1%
238,650 Paychex, Inc. 8,651,063
--------------------------------------------------------------------------------
Capital Goods-Miscellaneous Technology -- 0.5%
50,000 Aviall, Inc. 418,750
8,255 Olsten Corp. 270,350
105,000 Read-Rite Corp. 2,808,750
37,300 Rexel, Inc. 354,350
------------
3,852,200
--------------------------------------------------------------------------------
Chemicals -- 6.9%
34,000 Albemarle Corp. 531,250
35,000 Avery Dennison Corp. 1,400,000
77,800 Cambrex Corp. 2,625,750
35,000 Dow Chemical Co. 2,515,625
244,700 E.I. Dupont De Nemours, Inc. 16,823,125
127,700 Eastman Chemical Co. 7,598,150
217,800 Hercules, Inc. 10,617,750
23,000 Monsanto Co. 2,072,875
12,900 OM Group, Inc. 367,650
145,000 PPG Industries, Inc. 6,235,000
18,000 Schulman A., Inc. 517,500
182,000 Sterling Chemicals, Inc. 2,115,750
100,000 Union Carbide Corp. 3,337,500
------------
56,757,925
--------------------------------------------------------------------------------
Conglomerates -- 1.2%
174,700 Pittston Services Group $ 4,192,800
95,000 Textron, Inc. 5,521,875
------------
9,714,675
--------------------------------------------------------------------------------
Containers -- 0.2%
61,750 Alltrista Corp. 1,188,687
25,000 Ball Corp. 871,875
------------
2,060,562
--------------------------------------------------------------------------------
Cosmetics and Toiletries -- 0.2%
8,100 Helen of Troy Ltd. 170,100
44,000 Gillette Co. 1,963,500
------------
2,133,600
--------------------------------------------------------------------------------
Electrical Equipment -- 0.2%
15,000 Cable Design Technologies Corp. 322,500
21,300 Linear Technology Corp. 1,405,800
------------
1,728,300
--------------------------------------------------------------------------------
Electronics and Instruments -- 0.9%
200,000 Analogic Corp. 3,350,000
37,000 Electroglas, Inc. 2,118,250
31,000 Strattec Sec. Corp. 379,750
38,000 Tektronix, Inc. 1,871,500
------------
7,719,500
--------------------------------------------------------------------------------
Energy-Miscellaneous -- 0.7%
129,500 Giant Industries, Inc. 1,100,750
167,104 Holly Corp. 3,864,280
86,500 Howell Corp. 1,189,375
------------
6,154,405
--------------------------------------------------------------------------------
Entertainment -- 1.1%
58,000 Walt Disney Co. 3,226,250
134,272 Mattel, Inc. 3,491,072
6,000 National Gaming Corp. 51,750
5,880 Viacom, Inc., Cl A* 273,420
44,552 Viacom, Inc., Cl B* 2,066,099
54,800 Viacom, Inc., Non-Voting 82,200
------------
9,190,791
--------------------------------------------------------------------------------
Fertilizer -- 0.8%
55,800 First Mississippi Corp. 1,904,175
52,800 Mississippi Chemical Corp. 1,052,700
289,300 Terra Industries, Inc. 3,507,763
------------
6,464,638
--------------------------------------------------------------------------------
Financial-Banks -- 2.0%
80,000 Bank of New York, Inc. 3,230,000
23,000 Central & Southern Hldgs. Co. 168,188
38,464 Citicorp 2,226,104
18,000 Commonwealth Bankshares, Inc. 147,375
65,000 First Bank Systems Corp. 2,665,000
12,400 First Empire State Corp. 2,126,600
32,226 Gateway Bancorp, Inc. 386,712
49,005 Hubco, Inc. 875,964
70,000 Premier Bancorp., Inc. 1,260,000
--------------------------------------------------------------------------------
See Notes to Financial Statements.
15
<PAGE>
The Guardian Park Avenue Fund
Schedule of Investments (Continued)
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
123,240 Signet Banking Corp. $ 2,695,875
12,000 Star Banc Corp. 552,000
5,000 US Bancorp., Inc. 117,500
------------
16,451,318
--------------------------------------------------------------------------------
Financial-Others -- 4.4%
105,000 American Express Co. 3,688,125
123,240 Capital One Financial Corp. 2,403,180
95,000 Dean Witter Discover & Co. 4,465,000
152,200 Duff & Phelps Corp. 1,636,150
10,000 Duff & Phelps Cr. Rating Co. 130,000
163,000 First USA, Inc. 7,233,125
89,400 Foothill Group, Inc. 2,279,700
190,500 Green Tree Acceptance, Inc. 8,453,437
50,000 Jefferies Group, Inc. 1,800,000
57,400 McDonald & Co. Investments, Inc. 911,225
167,850 Morgan Keegan, Inc. 2,056,162
67,300 Raymond James Financial, Inc. 1,303,938
------------
36,360,042
--------------------------------------------------------------------------------
Financial-Thrift -- 3.7%
9,600 Albank Fin'l. Corp. 250,800
14,000 Bell Bancorp 395,500
75,000 Brooklyn Bancorp., Inc. 2,531,250
88,750 Charter One Financial, Inc. 2,174,375
47,000 Coastal Bank Svgs. Assn. - TX 763,750
152,199 Collective Bancorp, Inc. 3,082,030
53,100 Greenpoint Financial Corp. 1,254,488
59,800 Loyola Capital Corp. 1,853,800
24,600 MAF Bancorp, Inc. 578,100
59,200 Maryland Fed. Bancorp, Inc. 1,909,200
20,960 Pacific Crest Capital, Inc. 115,280
84,800 Progressive Bank, Inc. 2,173,000
171,000 Roosevelt Financial Group, Inc. 2,853,562
347,851 Sovereign Bancorp, Inc. 3,348,066
78,000 Standard Fed. Bk. - Troy, MI 2,622,750
93,982 TCF Financial Corp. 4,464,145
------------
30,370,096
--------------------------------------------------------------------------------
Food, Beverage and Tobacco -- 3.5%
165,000 Archer Daniels Midland Co. 3,073,125
29,700 Brown-Forman Corp. 991,237
196,300 Coca Cola Co. 12,514,125
73,700 IBP, Inc. 3,205,950
124,000 Philip Morris Cos., Inc. 9,222,500
------------
29,006,937
--------------------------------------------------------------------------------
Health Care -- 4.4%
145,700 Caremark International, Inc. 2,914,000
50,000 Circa Pharmaceuticals, Inc. 1,593,750
23,877 Coram Healthcare Corp. 337,263
50,000 Eli Lilly & Co., Inc. 3,925,000
32,400 Healthsource, Inc. 1,134,000
102,000 Humana, Inc. 1,797,750
77,000 Johnson & Johnson 5,207,125
78,000 Liposome, Inc. 848,250
104,000 McKesson Corp. 4,862,000
128,000 Merck & Co., Inc. 6,272,000
100,000 Universal Health Svcs., Inc. 2,900,000
148,900 U.S. Healthcare Systems, Inc. 4,560,062
------------
36,351,200
--------------------------------------------------------------------------------
Household Products -- 0.9%
105,200 Procter & Gamble Co. 7,561,250
--------------------------------------------------------------------------------
Information Processing -- 8.4%
89,800 Amdahl Corp. 999,025
46,200 Astro-Med, Inc. 528,412
66,100 Ceridian Corp. 2,437,438
258,000 Computer Assoc. Int'l., Inc. 17,479,500
80,000 Fair Isaac & Co., Inc. 2,380,000
116,400 Hewlett Packard Co. 8,671,800
30,500 In Focus Systems, Inc. 823,500
260,700 Int'l. Business Machine 25,027,200
18,700 Legent Corp. 818,125
220,000 Quantum Corp. 5,032,500
50,500 Sungard Data Systems, Inc. 2,638,625
38,900 Teradyne, Inc. 2,543,088
------------
69,379,213
--------------------------------------------------------------------------------
Insurance -- 1.9%
55,000 AMBAC, Inc. 2,206,875
48,000 American Eagle Group, Inc. 576,000
74,000 Amer. Bankers Ins. Group, Inc. 2,349,500
22,700 Capital Guaranty Corp. 408,600
17,000 Capitol Amer. Fin'l. Corp. 386,750
89,400 Equitable Iowa Cos., Inc. 2,939,025
42,080 Liberty Financial Cos., Inc. 1,083,560
65,000 MBIA, Inc. 4,322,500
61,500 State Auto Financial Corp. 1,153,125
------------
15,425,935
--------------------------------------------------------------------------------
Leisure Products -- 1.0%
22,700 Arctco, Inc. 266,725
180,000 Brunswick Corp. 3,060,000
56,300 Callaway Golf Co. 844,500
60,000 Harley-Davidson, Inc. 1,462,500
11,000 Recoton Corp. 214,500
30,800 Sturm Ruger & Co., Inc. 1,004,850
64,200 Thor Industries, Inc. 1,267,950
------------
8,121,025
--------------------------------------------------------------------------------
Lodging -- 1.6%
75,000 Hospitality Franchise Sys. Co.* 2,596,875
599,800 Host Marriott Corp. 6,372,875
75,000 Marriott Int'l., Inc. 2,690,625
175,000 Prime Hospitality Corp. 1,728,125
------------
13,388,500
--------------------------------------------------------------------------------
See Notes to Financial Statements.
16
<PAGE>
The Guardian Park Avenue Fund
Schedule of Investments (Continued)
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
Machinery and Equipment -- 6.0%
16,000 AGCO Corp. $ 600,000
155,000 Briggs & Stratton Corp. 5,347,500
30,000 Case Corp. 892,500
45,000 Caterpillar, Inc. 2,891,250
136,129 Cummins Engine, Inc. 5,938,628
61,900 Dana Corp. 1,771,887
35,000 Deere & Co. 2,996,875
59,000 Dover Corp. 4,292,250
94,300 Eaton Corp. 5,481,187
12,000 Furon Co. 264,000
155,600 Indresco, Inc. 2,411,800
45,000 Millipore Corp. 3,037,500
55,500 Parker Hannifin Corp. 2,011,875
74,100 Pentair, Inc. 3,223,350
15,400 Robbins & Myers, Inc. 423,500
20,100 Roper Industries, Inc. 703,500
69,900 Tecumseh Products Co. 3,075,600
63,938 Varlen Corp. 1,502,530
60,000 York International Corp. 2,700,000
------------
49,565,732
--------------------------------------------------------------------------------
Merchandising-Department Stores -- 1.4%
59,800 Carson Pirie Scott & Co. 979,225
246,700 Federated Dept. Stores, Inc. 6,352,525
70,000 Sears Roebuck & Co. 4,191,250
------------
11,523,000
--------------------------------------------------------------------------------
Merchandising-Drugs -- 0.2%
52,500 Bergen Brunswig Corp. 1,200,938
13,300 Foxmeyer Health Corp. 237,738
------------
1,438,676
--------------------------------------------------------------------------------
Merchandising-Food -- 0.9%
40,000 Albertson's, Inc. 1,190,000
314,800 Casey's General Stores, Inc. 5,666,400
------------
6,856,400
--------------------------------------------------------------------------------
Merchandising-Special -- 0.6%
87,300 Tandy Corp. 4,528,687
33,800 Waban, Inc. 502,775
------------
5,031,462
--------------------------------------------------------------------------------
Metals and Mining -- 2.7%
30,000 Alumax, Inc. 933,750
70,000 Aluminum Co. of America 3,508,750
128,000 Asarco, Inc. 3,904,000
36,000 Cyprus Amax Minerals Co. 1,026,000
118,300 Magma Copper Co. 1,922,375
70,000 Phelps Dodge Corp. 4,130,000
371,102 Santa Fe Pacific Gold Corp. 4,499,612
73,000 Weirton Steel Corp. 511,000
145,000 WHX Corp. 1,703,750
------------
22,139,237
--------------------------------------------------------------------------------
Natural Gas-Diversified -- 0.4%
118,300 Mitchell Energy & Dev. Corp. 2,114,613
92,500 USX Delhi Group 1,063,750
------------
3,178,363
--------------------------------------------------------------------------------
Oil and Gas Producing -- 3.6%
63,100 Alexander Energy Corp. 264,230
113,055 Apache Corp. 3,094,881
46,100 Barrett Resources Corp. 1,071,825
76,900 Basin Exploration, Inc. 456,594
115,000 Tom Brown, Inc. 1,710,625
90,000 Cairn Energy USA, Inc. 990,000
120,000 Chieftain International, Inc. 1,635,000
156,500 Coho Energy, Inc. 802,063
153,000 Devon Energy Corp. 3,289,500
227,400 Global Natural Res., Inc. 2,444,550
18,900 H S Resources, Inc. 264,600
140,000 Home Oil Ltd. 1,802,500
129,600 Phoenix Resource Cos., Inc. 4,114,800
105,000 Pogo Producing Co. 2,401,875
107,283 Snyder Oil Corp. 1,354,448
125,278 United Meridian Corp. 1,941,809
50,000 Vintage Petroleum, Inc. 937,500
140,000 Wainoco Oil Ltd. 577,500
------------
29,154,300
--------------------------------------------------------------------------------
Oil-Integrated-Domestic -- 1.4%
143,200 Amoco Corp. 9,549,024
207,000 Tesoro Petroleum, Inc. 2,070,000
------------
11,619,024
--------------------------------------------------------------------------------
Oil-Integrated-International -- 4.2%
75,000 Mobil Corp. 7,200,000
379,000 Exxon Corp. 26,819,000
------------
34,019,000
--------------------------------------------------------------------------------
Oil Services -- 0.9%
20,800 Cliffs Drilling Co. 296,400
209,400 Nabors Industries, Inc. 1,727,550
160,416 Noble Drilling Corp. 1,183,068
86,300 Offshore Logistics, Inc. 1,208,200
130,000 Smith International, Inc. 2,177,500
48,000 Weatherford International, Inc.* 606,000
------------
7,198,718
--------------------------------------------------------------------------------
Paper and Forest Products -- 3.8%
105,000 Boise Cascade Corp. 4,252,500
50,000 Federal Paper Board, Inc. 1,768,750
50,000 Georgia Pacific Corp. 4,337,500
33,000 International Paper Co. 2,829,750
60,000 Mead Corp. 3,562,500
328,000 Rayonier, Inc. 11,644,000
46,000 Willamette Industries, Inc. 2,553,000
------------
30,948,000
--------------------------------------------------------------------------------
See Notes to Financial Statements.
17
<PAGE>
The Guardian Park Avenue Fund
Schedule of Investments (Continued)
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
Railroads -- 0.8%
125,000 Illinois Central Corp. $ 4,312,500
97,952 Santa Fe Pacific Corp. 2,497,776
------------
6,810,276
--------------------------------------------------------------------------------
Restaurants -- 0.5%
157,900 Applebees Int'l., Inc. 4,065,925
--------------------------------------------------------------------------------
Semiconductor -- 8.2%
68,800 Adv. Micro-Devices, Inc. 2,502,600
39,000 Altera Corp. 1,686,750
39,000 Analog Devices, Inc. 1,326,000
30,700 Atmel Corp. 1,700,013
38,000 Cypress Semiconductor Corp. 1,539,000
142,000 Intel Corp. 8,990,375
38,000 International Rectifier Corp. 1,235,000
190,000 LSI Logic Corp. 7,433,750
299,500 Micron Technology, Inc. 16,435,062
87,300 Motorola, Inc. 5,860,013
14,000 Novellus Systems, Inc. 948,500
94,500 Texas Instruments, Inc. 12,651,187
50,000 Xilinx, Inc. 4,700,000
------------
67,008,250
--------------------------------------------------------------------------------
Telecommunication -- 1.9%
18,000 ADC Telecommunication, Inc. 643,500
171,450 Andrew Corp. 9,922,669
100,000 DSC Communication Corp. 4,650,000
------------
15,216,169
--------------------------------------------------------------------------------
Textile-Apparel and Production -- 0.6%
113,000 Fieldcrest Cannon, Inc. 2,443,625
101,300 Wellman, Inc. 2,773,088
------------
5,216,713
--------------------------------------------------------------------------------
Transportation-Miscellaneous -- 0.1%
109,400 Maritrans, Inc. 642,725
--------------------------------------------------------------------------------
Truckers -- 0.3%
59,000 FRP Pptys., Inc. 1,268,500
25,000 Landstar System, Inc. 643,750
20,000 Werner Enterprises, Inc. 400,000
------------
2,312,250
--------------------------------------------------------------------------------
Utilities-Gas and Pipeline -- 0.1%
25,000 ONEOK, Inc. 534,375
--------------------------------------------------------------------------------
Total Common Stocks
(Cost $549,389,535) 751,505,819
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Convertible Bonds -- 0.1%
--------------------------------------------------------------------------------
Principal
Amount Value
--------------------------------------------------------------------------------
$ 900,000 Mediq, Inc. 7.25%
Deb., due 6/1/06 $ 760,500
--------------------------------------------------------------------------------
Total Convertible Bonds
(Cost $865,567) 760,500
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
U.S. Government Securities -- 1.4%
--------------------------------------------------------------------------------
Principal
Amount Value
--------------------------------------------------------------------------------
$11,000,000 U.S. Treasury Notes,
4.25% due 7/31/95 $ 10,988,010
--------------------------------------------------------------------------------
Total U.S. Government Securities
(Cost $11,000,868) 10,988,010
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Repurchase Agreement -- 7.0%
--------------------------------------------------------------------------------
Principal Maturity
Amount Date Value
--------------------------------------------------------------------------------
$57,437,000 State Street Bank & Trust
repurchase agreement, dated
6/30/95, maturity value
$57,465,719, 6%, due 7/3/95
(collateralized by $56,420,000
U.S. Treasury Notes,
6.875% due 2/28/97) 7/3/95 $ 57,437,000
--------------------------------------------------------------------------------
Total Repurchase Agreement
(Cost $57,437,000) 57,437,000
--------------------------------------------------------------------------------
Total Investments -- 100.1%
(Cost $561,255,970) 820,691,329
Payables in Excess of Cash, Receivables
and Other Assets -- (0.1%) (419,024)
--------------------------------------------------------------------------------
Net Assets -- 100.0% $820,272,305
--------------------------------------------------------------------------------
See Notes to Financial Statements.
18
<PAGE>
o The Guardian Asset Allocation Fund
--------------------------------------------------------------------------------
Common Stocks -- 65.3%
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
Automotive -- 0.8%
14,000 Echlin, Inc. $ 486,500
--------------------------------------------------------------------------------
Broadcasting -- 3.2%
18,000 Capital Cities, ABC, Inc. 1,944,000
--------------------------------------------------------------------------------
Chemicals -- 8.7%
20,000 E.I. Du Pont de Nemours & Co. 1,375,000
22,600 Eastman Chemical Co. 1,344,700
27,400 PPG Industries, Inc. 1,178,200
30,000 Sterling Chemicals, Inc. 348,750
32,800 Union Carbide Corp. 1,094,700
------------
5,341,350
--------------------------------------------------------------------------------
Electronics and Instruments -- 1.0%
10,000 Electroglas, Inc. 572,500
3,000 Strattec Sec. Corp. 36,750
------------
609,250
--------------------------------------------------------------------------------
Financial-Banks -- 2.7%
31,800 Bank of New York, Inc. 1,283,925
17,165 Signet Banking Corp. 375,484
------------
1,659,409
--------------------------------------------------------------------------------
Financial-Other -- 2.0%
17,165 Capital One Fin'l Corp. 334,718
20,000 Green Tree Fin'l. Corp. 887,500
------------
1,222,218
--------------------------------------------------------------------------------
Fertilizer -- 0.5%
25,000 Terra Industries, Inc. 303,125
--------------------------------------------------------------------------------
Food, Beverage and Tobacco -- 0.5%
5,100 Coca Cola Co. 325,125
--------------------------------------------------------------------------------
Health Care -- 1.7%
60,300 Humana, Inc. 1,062,788
--------------------------------------------------------------------------------
Information Processing -- 8.9%
40,100 Amdahl Corp. 446,112
15,000 Ceridian Corp. 553,125
15,000 Hewlett Packard Co. 1,117,500
19,000 Int'l. Business Machines Co. 1,824,000
66,000 Quantum Corp. 1,509,750
------------
5,450,487
--------------------------------------------------------------------------------
Insurance -- 1.4%
22,000 AMBAC, Inc. 882,750
--------------------------------------------------------------------------------
Lodging -- 1.7%
100,000 Host Marriott Corp. 1,062,500
--------------------------------------------------------------------------------
Machinery and Equipment -- 3.9%
15,000 Briggs & Stratton Corp. 517,500
16,400 Cummins Engine, Inc. 715,450
10,000 Deere & Co. 856,250
5,000 Eaton Corp. 290,625
------------
2,379,825
--------------------------------------------------------------------------------
Merchandising-Department Stores -- 1.0%
10,000 Sears Roebuck & Co. 598,750
--------------------------------------------------------------------------------
Merchandising-Drugs -- 1.0%
26,250 Bergen Brunswig Corp. 600,469
--------------------------------------------------------------------------------
Merchandising-Special -- 0.5%
20,800 Waban, Inc. 309,400
--------------------------------------------------------------------------------
Metals and Mining -- 1.6%
40,000 Magma Copper Co. 650,000
2,180 Santa Fe Pacific Gold Corp. 26,432
25,000 WHX Corp. 293,750
------------
970,182
--------------------------------------------------------------------------------
Oil and Gas Producing -- 2.4%
10,000 Tom Brown, Inc. 148,750
10,000 Devon Energy Corp. 215,000
14,000 H S Resources, Inc. 196,000
14,000 Phoenix Resources Cos., Inc.* 444,500
20,000 Pogo Producing Co. 457,500
------------
1,461,750
--------------------------------------------------------------------------------
Oil-Integrated-Domestic -- 3.1%
23,000 Amoco Corp. 1,532,375
35,000 Tesoro Petroleum Corp. 350,000
------------
1,882,375
--------------------------------------------------------------------------------
Oil-Integrated-International -- 3.4%
29,000 Exxon Corp. 2,048,125
--------------------------------------------------------------------------------
Oil Services -- 0.5%
40,000 Nabors Industries, Inc. 330,000
--------------------------------------------------------------------------------
Paper and Forest Products -- 1.7%
30,000 Rayonier, Inc. 1,065,000
--------------------------------------------------------------------------------
Pollution Control -- 2.5%
41,600 Browning Ferris Inds., Inc. 1,502,800
--------------------------------------------------------------------------------
Railroads -- 1.9%
19,500 Illinois Central Corp. 672,750
18,415 Santa Fe Pacific Corp. 469,582
------------
1,142,332
--------------------------------------------------------------------------------
Semiconductor -- 7.6%
20,000 Intel Corp. 1,266,250
40,200 Micron Technology, Inc. 2,205,975
18,000 Motorola, Inc. 1,208,250
------------
4,680,475
--------------------------------------------------------------------------------
See Notes to Financial Statements.
19
<PAGE>
The Guardian Asset Allocation Fund
Schedule of Investments (Continued)
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
Textile-Apparel and Production -- 1.1%
9,100 Fieldcrest Cannon, Inc. $ 196,788
17,900 Wellman, Inc. 490,012
------------
686,800
--------------------------------------------------------------------------------
Total Common Stocks
(Cost $33,289,158) 40,007,785
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Corporate Bonds -- 3.2%
--------------------------------------------------------------------------------
Principal
Amount Value
--------------------------------------------------------------------------------
$1,000,000 BAT Capital Corp.,
6.875% Deb., due 4/15/03 $ 991,770
500,000 Ford Motor Cr. Mtn. Bk.,
5.85% Deb., due 3/26/98 493,295
500,000 McDermott, Inc. Mtn. Bk. Ent.,
6.57% Deb., due 4/20/98 497,990
--------------------------------------------------------------------------------
Total Corporate Bonds
(Cost $1,994,785) 1,983,055
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Multi Class Mortgage Pass-Throughs -- 7.8%
--------------------------------------------------------------------------------
Principal
Amount Value
--------------------------------------------------------------------------------
$1,000,000 Federal Home Loan Mortgage
Corp., 7% due 3/15/21 $ 983,750
1,000,000 Federal Home Loan Mortgage
Corp., 6.25% due 12/15/18 965,930
1,000,000 Federal National Mortgage
Assn., 5.75% due 4/25/06 966,560
1,000,000 Federal National Mortgage
Assn., 6.25% due 7/25/07 969,680
913,541 Residential Fdg. Mortgage Secs.,
Inc., 6.50% due 9/25/08 875,282
--------------------------------------------------------------------------------
Total Multi Class Mortgage
Pass-Throughs (Cost $4,725,967) 4,761,202
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
U.S. Government Securities -- 22.2%
--------------------------------------------------------------------------------
Principal
Amount Value
--------------------------------------------------------------------------------
$13,750,000 U.S. Treasury Bills, 5.64%
due 9/7/95 $ 13,603,517
--------------------------------------------------------------------------------
Total U.S. Government Securities
(Cost $13,603,517) 13,603,517
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Repurchase Agreement -- 2.2%
--------------------------------------------------------------------------------
Principal Maturity
Amount Date Value
--------------------------------------------------------------------------------
$1,364,000 State Street Bank & Trust
repurchase agreement,
dated 6/30/95, maturity value
$1,364,682, 6%, due 7/3/95
(collateralized by $1,390,000
U.S. Treasury Notes,
5.25% due 7/30/98) 7/3/95 $ 1,364,000
--------------------------------------------------------------------------------
Total Repurchase Agreement
(Cost $1,364,000) 1,364,000
--------------------------------------------------------------------------------
Total Investments -- 100.7%
(Cost $54,977,427) 61,719,559
Payables in Excess of Cash, Receivables
and Other Assets -- (0.7%) (418,002)
--------------------------------------------------------------------------------
Net Assets -- 100.0% $61,301,557
--------------------------------------------------------------------------------
See Notes to Financial Statements.
20
<PAGE>
o The Guardian Baillie Gifford International Fund
--------------------------------------------------------------------------------
Common Stocks -- 95.6%
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
Argentina -- 0.5%
Real Estate -- 0.5%
54,100 Comercial De Plata $ 220,881
--------------------------------------------------------------------------------
Austria -- 1.1%
Banks -- 0.2%
1,770 Creditanstalt Bank 101,947
Business Services -- 0.3%
2,380 Flughafen Wien AG 126,575
Construction Materials -- 0.6%
610 Wienerberger Baust 234,230
------------
462,752
--------------------------------------------------------------------------------
Australia -- 4.3%
Business Services -- 0.3%
17,000 Brambles Industries Ltd. 161,180
Electric Utilities -- 0.7%
87,562 Australia Gas & Light Co. 276,937
Forest Products -- 0.6%
35,961 Amcor Limited 265,299
Metals -- 0.5%
35,000 Western Mining Corp. 192,786
Petroleum Services -- 1.0%
33,505 Broken Hill Proprietary 412,443
Real Estate -- 0.6%
18,988 Lend Lease Corp. 241,075
Retail Trade -- 0.6%
111,741 Woolworths Ltd. 231,900
------------
1,781,620
--------------------------------------------------------------------------------
Belgium -- 1.4%
Banks -- 1.2%
1,530 Generale De Banque 491,605
Metals -- 0.2%
1,600 Union Miniere 104,619
------------
596,224
--------------------------------------------------------------------------------
Brazil -- 0.6%
Broadcasting -- 0.4%
4,500 Telecomunicados Brasileras 150,187
Energy -- 0.2%
3,985 Companhia Energetica De Minas 80,696
------------
230,883
--------------------------------------------------------------------------------
Chile -- 0.4%
Electric Utilities -- 0.4%
6,300 Enersis SA 185,850
--------------------------------------------------------------------------------
Czechoslovakia -- 0.3%
Electric Utilities -- 0.3%
3,020 Ceska Energeticke Zavody 109,818
--------------------------------------------------------------------------------
Denmark -- 0.6%
Telecommunication -- 0.6%
4.490 Tele Danmark AS 249,837
--------------------------------------------------------------------------------
France -- 6.0%
Bank -- 1.1%
4,000 Societe Generale 467,504
Chemicals -- 0.5%
9,250 Rhone Poulenc SA 208,403
Conglomerates -- 0.6%
1,010 CGIP 235,465
Containers and Glass -- 0.7%
2,280 Cie De St Gobain 275,407
Leisure Time -- 0.4%
1,600 Club Mediterranee 163,090
Oil-Integrated -- 0.8%
4,470 Societe Elf Aquitaine 330,323
Retail Trade -- 1.5%
760 Carrefour 389,297
1,300 Castorama Dubois 215,447
Toys, Amusement, Sporting Goods -- 0.4%
1,070 BIC 176,448
------------
2,461,384
--------------------------------------------------------------------------------
Germany -- 5.9%
Air Travel -- 0.9%
2,475 Lufthansa AG 357,944
Automobile -- 0.7%
1,060 Volkswagen AG 306,219
Banks -- 1.1%
9,750 Deutsche Bank AG 473,787
Building Construction -- 0.6%
375 Kampa Haus AG 226,969
Chemical -- 0.8%
1,480 BASF AG 316,141
Industrial Machinery -- 0.8%
1,300 Man AG 335,129
Drugs and Health Care -- 1.0%
937 GEHE AG 427,006
------------
2,443,195
--------------------------------------------------------------------------------
Hong Kong -- 5.8%
Conglomerates -- 1.7%
80,000 Hutchison Whampoa 386,673
40,000 Swire Pacific 304,996
Electric Utilities -- 0.4%
109,440 Hong Kong and China Gas 174,673
Financial-Bank -- 1.0%
30,679 HSBC Holdings 393,509
Real Estate -- 2.1%
73,000 Cheung Kong Holdings 361,330
--------------------------------------------------------------------------------
See Notes to Financial Statements.
21
<PAGE>
The Guardian Baillie Gifford International Fund
Schedule of Investments (Continued)
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
80,000 Hong Kong Land Holding $ 145,600
51,000 Sun Hung Kai Properties 377,336
Telephone -- 0.6%
133,000 Hong Kong Telecommunications 262,982
------------
2,407,099
--------------------------------------------------------------------------------
Hungary -- 0.1%
Retail Trade -- 0.1%
22,000 Fotex 32,187
--------------------------------------------------------------------------------
Ireland -- 0.3%
Construction Materials -- 0.3%
19,500 CRH 130,532
--------------------------------------------------------------------------------
Italy -- 2.7%
Automobiles -- 0.8%
93,700 Fiat Spa 330,420
Insurance -- 0.8%
53,280 RAS 322,570
Telephone -- 1.1%
170,000 Telecom Italia 460,779
------------
1,113,769
--------------------------------------------------------------------------------
Japan -- 27.8%
Automobiles -- 1.8%
43,000 Calsonic Corp. 292,737
40,000 Suzuki Motor Corp. 445,991
Banks -- 0.9%
19,000 Sanwa Bank 358,681
Business Services -- 1.8%
35,000 Kamigumi Co. 351,012
6,000 Secom Co. 377,323
Construction and Mining Equipment -- 0.9%
32,000 Nishimatsu Construction 377,559
Drugs and Health Care -- 1.2%
12,100 Sankyo Co. 281,246
8,800 Santen Pharmaceutical Co. 234,653
Electrical Equipment -- 1.2%
49,000 Hitachi Corp. 488,526
Electronics -- 3.9%
21,000 Aiwa Co. 507,935
8,000 Kyocera Corp. 658,840
12,000 Murata Manufacturing Co. 454,486
Financial Services -- 1.2%
9,000 Japan Securities Finance 100,879
9,600 Promise Co. 400,967
Homebuilders -- 0.7%
24,000 Sekusui House 297,328
Industrial Machinery -- 1.8%
30,000 Amada Co. 256,622
72,000 Mitsubishi Heavy Ind. 489,316
Insurance -- 0.9%
32,000 Tokio Marine & Fire Ins. 366,987
Investment Companies -- 1.0%
24,000 Nomura Securities Co. 419,090
Leisure Time -- 0.7%
1,800 Toho Co. 299,451
Photography -- 1.8%
30,000 Canon, Inc. 488,467
11,000 Fuji Photo Film Co. 260,870
Real Estate -- 1.0%
37,000 Mitsubishi Estate 416,908
Retail Grocery -- 0.9%
5,000 Seven Eleven Japan 358,091
Retail Trade -- 2.2%
6,000 Ito Yokado Co. 316,441
25,000 Marui Co. 398,207
7,000 Shimachu Co. 177,571
Steel -- 1.4%
26,000 Hitachi Metals 291,735
118,000 Sumitomo Metal Ind. 307,687
Telecommunication -- 1.5%
76 DDI Corp. 609,758
Tires and Rubber -- 1.0%
28,000 Bridgestone Corp. 412,955
------------
11,498,319
--------------------------------------------------------------------------------
Malaysia -- 2.9%
Conglomerates -- 0.9%
130,800 Sime Darby Berhad 364,824
Leisure Time -- 1.1%
80,000 Resorts World Berhad 469,237
Telephone -- 0.9%
48,000 Telekom Malaysia 364,233
------------
1,198,294
--------------------------------------------------------------------------------
Mexico -- 0.8%
Building and Construction -- 0.1%
1,330 Tolmex 51,915
Food, Beverage and Tobacco -- 0.4%
5,800 Pan American Beverage 174,000
Telephone -- 0.3%
3,500 Telefonos de Mexico SA 103,687
------------
329,602
--------------------------------------------------------------------------------
Netherlands -- 2.8%
Banks -- 0.9%
10,070 ABN Amro Holdings NV 388,633
Household Appliances -- 1.3%
12,500 Philip Electronics NV 529,203
--------------------------------------------------------------------------------
See Notes to Financial Statements.
22
<PAGE>
The Guardian Baillie Gifford International Fund
Schedule of Investments (Continued)
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
Publishing -- 0.6%
1,950 Ver Ned Uitgevers $ 233,446
------------
1,151,282
--------------------------------------------------------------------------------
New Zealand -- 0.7%
Telecommunication -- 0.7%
80,000 Telecom Corp. of New Zealand 299,505
--------------------------------------------------------------------------------
Poland -- 0.3%
Miscellaneous -- 0.3%
36,000 Elektrim 126,869
--------------------------------------------------------------------------------
Singapore -- 3.2%
Air Travel -- 0.8%
35,000 Singapore Airlines 323,077
Banks -- 1.1%
40,000 Overseas Chinese Bank 443,649
Industrial Machinery -- 0.6%
40,000 Sembawang Corp. 243,292
Publishing -- 0.7%
19,200 Singapore Press HD 287,141
------------
1,297,159
--------------------------------------------------------------------------------
Spain -- 1.4%
Banks -- 1.4%
14,500 Banco Santander SA 571,620
--------------------------------------------------------------------------------
Sweden -- 1.5%
Business Services -- 0.4%
5,350 Securitas AB 185,419
Construction & Mining Equipment -- 1.1%
14,500 Atlas Copco AB 201,414
6,000 Incentive AB 241,779
------------
628,612
--------------------------------------------------------------------------------
Switzerland -- 4.8%
Business Services -- 0.5%
225 Danzas Holding 193,443
Drugs and Healthcare -- 1.3%
799 Sandoz AG 550,939
Food, Beverage and Tobacco -- 1.2%
495 Nestle SA 515,419
Industrial Machinery -- 0.5%
130 Bobst AG 197,568
Insurance -- 1.3%
946 Winterthur 522,946
------------
1,980,315
--------------------------------------------------------------------------------
Thailand -- 0.6%
Financial Services -- 0.6%
100,000 Ind. Fin. Thailand 263,318
--------------------------------------------------------------------------------
United Kingdom -- 18.8%
Banks -- 1.3%
34,000 Abbey National 253,094
36,500 National Westminster Bk. Co. 317,278
Business Services -- 1.7%
18,000 Associated British Ports 80,165
44,000 BAA 345,380
36,000 Reuters Holdings 299,761
Chemicals -- 0.5%
100,000 Allied Colloids 196,437
Conglomerates -- 2.3%
89,051 BTR 447,660
48,000 Hanson 167,584
16,000 Hays 80,165
26,000 Siebe 260,124
Containers and Glass -- 0.3%
37,000 Caradon PLC 138,890
Construction and Mining Equipment -- 0.4%
20,000 Scapa Group 73,962
20,000 Weir Group 80,802
Drugs and Healthcare -- 1.1%
39,000 Glaxo Holdings 478,583
Electric Utilities -- 1.0%
23,000 National Power 162,979
22,480 Yorkshire Electric Group 246,719
Electronics -- 0.7%
20,000 Electrocomponents 190,870
40,000 Rotork 104,342
Food, Beverage and Tobacco -- 2.9%
30,000 Devro International 105,933
45,000 Guinness 338,556
20,000 Highland Distilleries 111,341
40,000 Iceland Group 114,522
22,000 Reckitt and Colman 232,702
30,000 Rothmans Int'l. NV 293,940
Household Products -- 0.1%
27,000 Life Sciences International 51,964
International Oil -- 1.5%
52,000 Shell Transport and Trading 621,568
Insurance -- 1.1%
10,000 Britannic Assurance 87,005
58,000 Prudential Corp. 308,128
Leisure Time -- 1.0%
38,000 Granada Group 368,697
6,000 Vendome Lux Group SA 45,141
Newspapers -- 0.2%
40,000 Mirror Group PLC 84,619
Retail Grocery -- 0.8%
46,000 Sainsbury (J) 323,032
Retail Trade -- 0.9%
15,000 Fine Art Developments 93,765
45,000 Marks & Spencer 289,168
--------------------------------------------------------------------------------
See Notes to Financial Statements.
23
<PAGE>
The Guardian Baillie Gifford International Fund
Schedule of Investments (Continued)
--------------------------------------------------------------------------------
Shares Value
--------------------------------------------------------------------------------
Telephone -- 0.7%
75,000 Vodafone Group $ 278,551
Transportation-- 0.3%
55,000 Firstbus 125,099
------------
7,798,526
--------------------------------------------------------------------------------
Total Common Stocks
(Cost $36,521,501) 39,569,452
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Repurchase Agreement -- 4.0%
--------------------------------------------------------------------------------
Principal Maturity
Amount Date Value
--------------------------------------------------------------------------------
$1,640,000 State Street Bank & Trust
repurchase agreement, dated
6/30/95, maturity value
$1,640,649 at 4.75% due
7/3/95 (collateralized by
$1,275,000 U.S. Treasury
Bonds, 9.25% due
2/15/10) 7/3/95 $ 1,640,000
--------------------------------------------------------------------------------
Total Repurchase Agreement
(Cost $1,640,000) 1,640,000
--------------------------------------------------------------------------------
Total Investments -- 99.6%
(Cost $38,161,501) 41,209,452
Cash, Receivables and Other Assets
Less Payables -- 0.4% 185,680
--------------------------------------------------------------------------------
Net Assets -- 100.0% $41,395,132
--------------------------------------------------------------------------------
See Notes to Financial Statements.
24
<PAGE>
o The Guardian Investment Quality Bond Fund
--------------------------------------------------------------------------------
Corporate Bonds -- 31.3%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal
Amount Value
--------------------------------------------------------------------------------
Asset Backed -- 8.5%
$2,000,000 American Express Master Tr.,
5.375% due 7/15/01 $ 1,903,120
1,000,000 Banc One Auto Tr., 6.90%
due 4/15/98 1,014,100
1,500,000 Premier Auto Tr., 7.85% due
2/4/98 1,537,965
-----------
4,455,185
--------------------------------------------------------------------------------
Chemicals -- 2.8%
1,500,000 Union Carbide Corp.,
6.79% due 6/1/25 1,488,330
--------------------------------------------------------------------------------
Drugs and Hospital -- 1.9%
1,000,000 Rhone Poulenc SA,
6.75% due 10/15/99 1,002,260
--------------------------------------------------------------------------------
Electric Utilities -- 1.8%
1,000,000 Illinois Power Co., 5.625% due
4/15/00 956,420
--------------------------------------------------------------------------------
Financial-Miscellaneous -- 6.0%
2,000,000 General Motors Accep. Corp.,
8.125% due 3/1/01 2,125,120
1,000,000 Grand Metropolitan, 7% due
6/15/99 1,013,000
-----------
3,138,120
--------------------------------------------------------------------------------
Food, Beverage and Tobacco -- 1.9%
1,000,000 BAT Capital Corp., 6.875%
due 4/15/03 991,770
--------------------------------------------------------------------------------
Machinery and Industrial Equipment -- 0.9%
500,000 McDermott International, Inc.,
6.57% due 4/20/98 497,990
--------------------------------------------------------------------------------
Paper and Forest Products -- 3.8%
2,000,000 James River Corp. VA,
6.75% due 10/1/99 1,993,580
--------------------------------------------------------------------------------
Telecommunication -- 3.7%
2,000,000 Amer. Tel. & Tel. Capital Corp.,
5.28% due 8/15/97 1,959,560
--------------------------------------------------------------------------------
Total Corporate Bonds
(Cost $16,444,133) $16,483,215
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Multi Class Mortgage Pass-Throughs -- 31.3%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal
Amount Value
--------------------------------------------------------------------------------
$1,000,000 Federal Home Loan Mortgage
Corp., 7% due 3/15/21 $ 983,750
1,000,000 Federal Home Loan Mortgage
Corp., 7.40% due 12/15/21 1,014,060
2,000,000 Federal Home Loan Mortgage
Corp., 6.50% due 5/15/19 1,923,120
1,000,000 Federal National Mortgage
Assn., 7.00% due 5/25/20 985,930
2,000,000 Federal National Mortgage
Assn., 5.75% due 4/25/06 1,933,120
2,000,000 Federal National Mortgage
Assn., 6.25% due 5/25/07 1,938,120
2,000,000 GE Capital Mortgage Svcs.,
Inc., 6.50% due 4/25/24 1,871,645
1,000,000 Residential Fdg. Mtg. Secs.,
Inc., 6.50% due 9/25/08 875,282
1,000,000 Federal National Mortgage
Assn., 6.75% due 5/25/21 975,930
2,000,000 Federal National Mortgage
Assn., 6.44% due 6/21/05 1,986,800
2,000,000 Securitized Asset Sales, Inc.,
7.41% due 4/25/24 1,958,800
--------------------------------------------------------------------------------
Total Multi Class Mortgage Pass-
Throughs (Cost $16,185,087) 16,446,557
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Mortgage Pass-Throughs -- 5.8%
--------------------------------------------------------------------------------
Principal
Amount Value
--------------------------------------------------------------------------------
$1,000,000 Federal National Mortgage
Assn., 8% due 8/1/19 $ 996,957
2,000,000 GNMA30-year TBA,
8% due 1/15/99 2,047,500
--------------------------------------------------------------------------------
Total Mortgage Pass-Throughs
(Cost $3,020,694) 3,044,457
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
U.S. Government and Agencies -- 27.4%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal
Amount Value
--------------------------------------------------------------------------------
$3,000,000 Federal Home Loan Mortgage
Corp., 7.188% due 9/15/09 $ 3,052,980
597,000 U.S. Treasury Bonds, 12%
due 8/15/13 880,575
241,000 U.S. Treasury Bonds, 11.75%
due 11/15/14 356,528
2,500,000 U.S. Treasury Notes, 7.625%
due 2/15/25 2,823,425
3,000,000 U.S. Treasury Notes, 7.75%
due 1/31/00 3,205,320
4,000,000 U.S. Treasury Notes, 6.50%
due 8/15/97 4,085,000
--------------------------------------------------------------------------------
Total U.S. Government and Agencies
(Cost $13,817,122) 14,403,828
--------------------------------------------------------------------------------
See Notes to Financial Statements.
25
<PAGE>
The Guardian Investment Quality Bond Fund
Schedule of Investments (Continued)
--------------------------------------------------------------------------------
Repurchase Agreement -- 13.1%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Principal Maturity
Amount Date Value
--------------------------------------------------------------------------------
$6,861,000 State Street Bank & Trust
repurchase agreement, dated
6/30/95, maturity value
$6,864,431, 6.00%, due 7/3/95
(collateralized by $6,985,000
U.S. Treasury Notes,
5.25% due 7/31/98) 7/3/95 $ 6,861,000
--------------------------------------------------------------------------------
Total Repurchase Agreement
(Cost $6,861,000) 6,861,000
--------------------------------------------------------------------------------
Total Investments -- 108.9%
(Cost $56,328,036) 57,239,057
Payables in Excess of Cash, Receivables
and Other Assets -- (8.9%) (4,682,817)
--------------------------------------------------------------------------------
Net Assets -- 100.0% $52,556,240
--------------------------------------------------------------------------------
See Notes to Financial Statements.
26
<PAGE>
o The Guardian Tax-Exempt Fund
--------------------------------------------------------------------------------
Municipal Bonds -- 98.1%
--------------------------------------------------------------------------------
Rating
Principal Moody's/
Amount S&P Value
--------------------------------------------------------------------------------
Alaska -- 1.2%
$ 200,000 Alaska St. Hag. Fin.
Corp., Series C
Corp. PCR Rev. 4.15%
due 6/1/26 AA/A+ $ 200,000
--------------------------------------------------------------------------------
Arizona -- 9.1%
500,000 Arizona Trans.
Highway Series A, 6%
due 7/1/08 Ai/AA 521,115
1,000,000 Phoenix, AZ G.O.
Series A, 5.40%
due 7/1/07 Aa/AA+ 1,008,790
-----------
1,529,905
--------------------------------------------------------------------------------
Florida -- 7.4%
465,000 Florida St. Board
of Educ. Cap. Outlay,
5.875% due 6/1/12 Aa/AA 469,320
800,000 Gainesville, FL
Utilities Systems Rev.,
5.50% due 10/1/13 Aa/AA 761,864
-----------
1,231,184
--------------------------------------------------------------------------------
Georgia -- 12.5%
1,000,000 Atlanta, GA Water
and Sewerage Rev.,
6% due 1/01/11 Aa/AA- 1,019,230
1,000,000 Georgia St. G.O.
Series B, 6.3%
due 3/01/10 Aaa/AA+ 1,077,630
-----------
2,096,860
--------------------------------------------------------------------------------
Hawaii -- 6.2%
1,000,000 Hawaii St. G.O.
due 11/1/09 Aa/AA 1,037,970
--------------------------------------------------------------------------------
Kentucky -- 3.0%
500,000 Kentucky ST. Turnpike*
Auth. Econ. Dev., .5.50%
due 7/1/09 Aaa/AAA 494,710
--------------------------------------------------------------------------------
Maryland -- 4.0%
660,000 Maryland St. & La. Facs.,
4.90% due 4/15/03 Aaa/AAA 662,495
--------------------------------------------------------------------------------
Massachusetts -- 9.0%
800,000 MA Bay Trans. Auth.
Gen. Trans. Sys.,
Series B, 5.80%
due 3/01/11 A/A+ 786,200
500,000 MA State Cons. Ln.
Ser. A, 5.50% due
7/1/12 Aa2/AA 717,293
-----------
1,503,493
--------------------------------------------------------------------------------
Michigan -- 4.2%
750,000 Michigan Public Power
Agency Rev., 5.50%
due 1/1/13 A1/AA- 711,248
--------------------------------------------------------------------------------
New Jersey -- 3.2%
500,000 NJ State Tpk. Auth.
Rev. Bd. Series C,
6.5% due 1/01/16 A/A 533,550
--------------------------------------------------------------------------------
New York -- 12.5%
750,000 New York City Mun.
Water Fin. Auth.,
Rev. Series A,*
5.875% due 6/15/13 Aaa/AAA 749,558
500,000 New York State G.O.
5.625% due 3/1/13 A/A- 480,750
850,000 Triborough Bridge &
Tunnel Auth. Rev.
Bond Series Y,
6% due 1/01/12 Aa/A+ 863,362
-----------
2,093,670
--------------------------------------------------------------------------------
North Carolina -- 6.3%
1,000,000 Mecklenburg County,
NC Refunding G.O.
6% due 4/01/11 Aaa/AAA 1,046,730
--------------------------------------------------------------------------------
Oklahoma -- 2.9%
500,000 Grand River Dam
Auth. Rev., 5.50% due
6/1/10 A/A- 487,070
--------------------------------------------------------------------------------
Oregon -- 4.2%
700,000 Portland, OR Pollution
Control, 4.35% due
12/1/09 A3/P1 700,000
--------------------------------------------------------------------------------
Pennsylvania -- 3.1%
500,000 Pennsylvania St. Tpk.
Comm. Rev., Series N,*
6.25% due 12/1/11 Aaa/AAA 511,780
--------------------------------------------------------------------------------
*Insured.
See Notes to Financial Statements.
27
<PAGE>
The Guardian Tax-Exempt Fund
Schedule of Investments (Continued)
--------------------------------------------------------------------------------
Rating
Principal Moody's/
Amount S&P Value
--------------------------------------------------------------------------------
Texas -- 9.3%
$ 300,000 Grapevine, TX Indl.
Dev. Corp. Rev.,
4.35% due 12/1/24 AA1/P1 $ 300,000
755,000 Harris County, TX
Ref. Rd., 5.125%
due 10/1/13 Aa/AA 691,640
600,000 Texas State Public
Fin. Auth., Ser. A,
5.50% due 10/1/13 Aa/AA 573,324
-----------
1,564,964
--------------------------------------------------------------------------------
Total Municipal Bonds
(Cost $16,781,396) 16,405,629
--------------------------------------------------------------------------------
Total Investments -- 98.1%
(Cost $16,781,396) 16,405,629
Cash, Receivables and Other Assets
Less Payables -- 1.9% 324,785
--------------------------------------------------------------------------------
Net Assets -- 100.0% $16,730,414
--------------------------------------------------------------------------------
Glossary of Terms:
G.O. - Government Obligation
PCR - Pollution Control Revenue
See Notes to Financial Statements.
28
<PAGE>
o The Guardian Cash Management Fund
--------------------------------------------------------------------------------
Commercial Paper -- 95.0%
--------------------------------------------------------------------------------
Principal Maturity
Amount Date Value
--------------------------------------------------------------------------------
Financial -- 20.7%
Bank Holding Companies -- 12.4%
$2,800,000 Barclays US Funding
Corp., 5.95% 07/03/95 $ 2,799,074
2,800,000 Commerzbank US
Fin. Corp., 5.94% 07/31/95 2,786,140
2,800,000 Dresdner US Finance
Corp., 5.98% 07/06/95 2,797,675
-----------
8,382,889
--------------------------------------------------------------------------------
Finance Companies -- 8.3%
2,800,000 Amer. Tel. & Tel.
Cap. Corp., 5.95% 07/17/95 2,792,596
2,800,000 USAA Capital
Corp., 5.95% 07/27/95 2,787,968
-----------
5,580,564
--------------------------------------------------------------------------------
Total Financial 13,963,453
--------------------------------------------------------------------------------
Industrial -- 74.3%
Aerospace and Defense -- 4.1%
2,800,000 Rockwell Int'l.
Corp., 5.95% 07/14/95 2,793,984
--------------------------------------------------------------------------------
Automotive -- 8.3%
2,800,000 Ford Motor Cr.
Co., 5.96% 07/19/95 2,791,656
2,800,000 Toyota Motor Credit
Co., 5.93% 07/07/95 2,797,233
-----------
5,588,889
--------------------------------------------------------------------------------
Beverage - Soft Drinks -- 4.1%
2,800,000 PepsiCo, Inc., 5.93% 07/21/95 2,790,776
--------------------------------------------------------------------------------
Conglomerate -- 4.1%
2,800,000 General Electric Corp.
Svcs., Inc., 5.94% 07/17/95 2,792,608
--------------------------------------------------------------------------------
Containers -- 4.1%
2,800,000 Sonoco Products
Co., 5.90% 07/06/95 2,797,706
--------------------------------------------------------------------------------
Drugs and Hospitals -- 8.3%
2,800,000 Abbott Labs, Inc.,
5.92% 07/10/95 2,795,856
2,800,000 Pfizer, Inc., 5.83% 07/13/95 2,794,559
-----------
5,590,415
--------------------------------------------------------------------------------
Electronics and Instruments -- 4.1%
2,800,000 TDK USA Corp.,
5.96% 07/20/95 2,791,192
--------------------------------------------------------------------------------
Food Processing -- 4.1%
2,800,000 Cargill, Inc., 5.92% 07/24/95 2,789,410
--------------------------------------------------------------------------------
Insurance -- 4.2%
$2,800,000 Amer. General Cap.
Svcs., 5.94% 07/05/95 2,798,152
--------------------------------------------------------------------------------
Machinery and Industrial Equipment -- 4.1%
2,800,000 John Deere Cap.
Corp., 5.92% 07/10/95 2,795,856
--------------------------------------------------------------------------------
Merchandising-Special -- 4.1%
2,800,000 Toys "R" Us.
Inc., 5.91% 07/12/95 2,794,944
--------------------------------------------------------------------------------
Oil-Integrated-Domestic -- 4.1%
2,800,000 Chevron Oil Fin.
Co., 5.93% 07/07/95 2,797,233
--------------------------------------------------------------------------------
Oil Service -- 4.2%
2,800,000 Colonial Pipeline
Co., 5.95% 07/06/95 2,797,686
--------------------------------------------------------------------------------
Telecommunications -- 12.4%
2,800,000 Amer. Telephone &
Telegraph Co., 5.92% 07/26/95 2,788,489
2,800,000 Bell Atlantic Tel.
Co., 5.97% 08/02/95 2,785,141
2,800,000 Bellsouth Telecomm.
Inc., 5.93% 07/13/95 2,794,465
-----------
8,368,095
--------------------------------------------------------------------------------
Total Industrial 50,286,944
--------------------------------------------------------------------------------
Total Commercial Paper
(Cost $64,250,397) 64,250,397
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Repurchase Agreement -- 4.8%
--------------------------------------------------------------------------------
Principal Maturity
Amount Date Value
--------------------------------------------------------------------------------
$3,225,000 State Street Bank & Trust
repurchase agreement,
dated 6/30/95, maturity
value $3,226,613 at
6.00%, due 7/3/95
(collateralized by
$3,170,000 U.S. Treasury
Notes, 6.875% due
2/28/97) 07/03/95 $ 3,225,000
--------------------------------------------------------------------------------
Total Repurchase Agreement
(Cost $3,225,000) 3,225,000
--------------------------------------------------------------------------------
Total Investments -- 99.8%
(Cost $67,475,397) 67,475,397
Cash, Receivables and Other Assets
Less Payables -- 0.2% 156,190
--------------------------------------------------------------------------------
Net Assets -- 100.0% $67,631,587
--------------------------------------------------------------------------------
See Notes to Financial Statements.
29
<PAGE>
Financial Statements
o The Park Avenue Portfolio
--------------------------------------------------------------------------------
Statements of Assets and Liabilities
--------------------------------------------------------------------------------
June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The Guardian The Guardian The Guardian The Guardian The Guardian The Guardian
Park Avenue Asset Baillie Gifford Investment Tax-Exempt Cash
Fund Allocation International Quality Fund Management
Fund Fund Bond Fund Fund
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at identified cost* ...... $561,225,970 $54,977,427 $38,161,501 $56,328,036 $16,781,396 $67,475,397
=========================================================================================
Investments, at market ................ 763,254,329 60,355,559 39,569,452 50,378,057 16,405,628 64,250,397
Repurchase agreements ................. 57,437,000 1,364,000 1,640,000 6,681,000 0 3,225,000
-----------------------------------------------------------------------------------------
Total Investments ............ 820,691,329 61,719,559 41,209,452 57,239,057 16,405,628 67,475,397
Cash .................................. 786 596 1,401 685 103,927 16,543
Foreign currency (Cost $121,578) ...... -- -- 121,244 -- -- --
Receivable for securities sold ........ 10,439,871 639,382 -- -- -- --
Receivable for fund shares sold ....... 1,480,622 67,411 63,757 6,366 1,193 465,344
Dividends receivable .................. 953,841 45,831 158,639 -- -- --
Interest receivable ................... 210,017 53,541 216 607,324 271,908 538
Receivable for open forward
foreign currency sold ............... -- -- 19,294 -- -- --
Deferred organization expenses--
Note 6 .............................. -- 9,332 9,327 9,332 9,332 --
Foreign tax receivable ................ -- -- 75,125 -- -- --
Other assets .......................... 3,886 351 176 351 176 1,078
-----------------------------------------------------------------------------------------
Total Assets ................. 833,780,352 62,536,003 41,658,631 57,863,115 16,792,164 67,958,900
LIABILITIES
Payable for securities purchased ...... 11,329,057 976,149 -- 5,076,467 -- --
Payable for fund shares redeemed ...... 438,076 50,755 13,530 76,351 -- 140,345
Accrued expenses ...................... 168,954 29,561 74,793 39,699 26,984 42,746
Foreign tax withholding ............... -- -- 24,979 -- -- --
Distributions payable ................. -- -- -- 18,444 3,415 1,853
Due to affiliates -- Note 2 ........... 1,571,960 177,981 150,197 95,914 31,351 142,369
-----------------------------------------------------------------------------------------
Total Liabilities ............ 13,508,047 1,234,446 263,499 5,306,875 61,750 327,313
-----------------------------------------------------------------------------------------
Net Assets ................... $820,272,305 $61,301,557 $41,395,132 $52,556,240 $16,730,414 $67,631,587
=========================================================================================
</TABLE>
* Includes repurchase agreements.
See Notes to Financial Statements.
30 & 31
<PAGE>
o The Park Avenue Portfolio
--------------------------------------------------------------------------------
Statements of Assets and Liabilities
--------------------------------------------------------------------------------
June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The Guardian The Guardian The Guardian The Guardian The Guardian The Guardian
Park Avenue Asset Baillie Gifford Investment Tax-Exempt Cash
Fund Allocation International Quality Fund Management
Fund Fund Bond Fund Fund
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMPONENTS OF NET ASSETS
Shares of beneficial interest of
$0.01 par value outstanding
(unlimited number of shares
authorized) ..................... $ 253,118 $ 52,394 $ 31,636 $ 53,927 $ 18,052 $ 676,316
Paid-in capital ................... 601,203,305 54,443,613 38,618,443 53,648,941 18,140,328 66,955,271
Undistributed net investment
income .......................... 3,465,264 627,050 134,753 -- -- --
Accumulated net realized gain/
(loss) on investments and
foreign currency related
transactions .................... 13,352,235 (563,632) (463,750) (2,057,649) (1,052,198) --
Net unrealized appreciation/
(depreciation) of investments
and foreign currency related
transactions .................... 201,998,383 6,742,132 3,074,050 911,021 (375,768) --
-------------------------------------------------------------------------------------------
Net Assets .................... $820,272,305 $61,301,557 $41,395,132 $52,556,240 $16,730,414 $67,631,587
===========================================================================================
Shares of beneficial interest
outstanding-- $0.01 par value ... 25,311,609 5,239,353 3,163,454 5,401,389 1,805,246 67,631,587
Net Asset Value Per Share ..... $ 32.41 $ 11.70 $ 13.09 $ 9.73 $ 9.27 $ 1.00
Maximum Offering Price Per Share
(Net asset value x 104.71%)* ...... $ 33.94 $ 12.25 $ 13.71 $ 10.19 $ 9.71 N/A**
</TABLE>
* Based on sale of less than $100,000. On sale of $100,000 or more, the
offering price is reduced.
** No-load fund.
See Notes to Financial Statements.
32 & 33
<PAGE>
o The Park Avenue Portfolio
--------------------------------------------------------------------------------
Statements of Operations
--------------------------------------------------------------------------------
Six Months Ended June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The Guardian The Guardian The Guardian The Guardian The Guardian The Guardian
Park Avenue Asset Baillie Gifford Investment Tax-Exempt Cash
Fund Allocation International Quality Fund Management
Fund Fund Bond Fund Fund
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividends .......................... $ 5,018,107 $ 237,573 $ 526,011 $ -- $ -- $ --
Interest ........................... 1,510,207 744,570 45,004 1,662,444 470,469 1,875,131
Other income ....................... 32,672 -- -- 58,721 -- --
-------------------------------------------------------------------------------------------
6,560,986 982,143 571,015 1,721,165 470,469 1,875,131
Less: Foreign tax withheld ......... 70,856 -- -- --
-------------------------------------------------------------------------------------------
Total Income ................ 6,560,986 982,143 500,159 1,721,165 470,469 1,875,131
-------------------------------------------------------------------------------------------
Expenses:
Investment advisory fees -- Note 2 . 1,792,542 185,644 157,477 119,573 40,896 155,776
12b-1 fees -- Note 3 ............... 537,763 71,401 49,212 59,786 20,448 77,888
Transfer agent fees ................ 465,452 29,018 49,214 42,660 21,794 79,807
Custodian fees ..................... 96,944 49,795 75,121 27,598 27,649 24,640
Printing expense ................... 44,200 4,200 3,950 2,500 450 4,300
Registration fees .................. 21,280 8,370 9,262 9,141 7,828 12,167
Audit fees ......................... 9,750 8,250 10,000 8,250 8,250 8,000
Trustees' fees -- Note 2 ........... 7,600 7,600 7,600 7,600 7,600 7,600
Insurance expense .................. 3,862 351 176 351 176 351
Legal fees ......................... 1,429 1,429 1,429 1,429 1,429 1,429
Other .............................. 360 360 360 360 360 360
Deferred organization expense --
Note 6 ........................... -- 1,669 1,605 1,669 1,669 --
-------------------------------------------------------------------------------------------
Total Expenses ................ 2,981,182 368,087 365,406 280,917 138,549 372,318
Less: Expenses assumed by
investment adviser -- Note 2 ..... -- -- -- 111,896 77,204 107,499
-------------------------------------------------------------------------------------------
Expenses Net of Reimbursement . 2,981,182 368,087 365,406 169,021 61,345 264,819
-------------------------------------------------------------------------------------------
Net Investment Income .............. 3,579,804 614,056 134,753 1,552,144 409,124 1,610,312
-------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS AND
CURRENCIES -- NOTE 4
Net realized gain/(loss) of
investments and foreign
currency related
transactions -- Note 1 ........... 11,640,891 674,060 (665,672) 162,929 (54,617) --
Net change in unrealized
appreciation of investments
and foreign currency
related transactions -- Note 4 ... 121,347,447 6,444,608 917,086 2,966,726 774,479 --
-------------------------------------------------------------------------------------------
Net Realized and Unrealized Loss
on Investments and Currencies .... 132,988,338 7,118,668 251,414 3,129,655 719,862 --
-------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS . $136,568,142 $7,732,724 $ 386,167 $4,681,799 $1,128,986 $1,610,312
===========================================================================================
</TABLE>
See Notes to Financial Statements.
34 & 35
<PAGE>
o The Park Avenue Portfolio
--------------------------------------------------------------------------------
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The Guardian The Guardian
Park Avenue Asset
Fund Allocation
Fund
------------------------------ ----------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
June 30, December 31, June 30, December 31,
1995 1994 1995 1994
(Unaudited) (Audited) (Unaudited) (Audited)
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS
From Operations:
Net investment income ............................... $ 3,579,804 $ 6,992,131 $ 614,056 $ 1,493,870
Net realized gain/(loss) on investments and
foreign currency related transactions .............. 11,640,891 14,157,157 674,060 (1,237,063)
Net change in unrealized appreciation/
(depreciation) on investments and
foreign currency related transactions .............. 121,347,447 (30,003,248) 6,444,608 (1,505,052)
--------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations ......................... 136,568,142 (8,853,960) 7,732,724 (1,248,245)
--------------------------------------------------------------------------
Distributions to Shareholders:
Net investment income ............................... -- (7,003,966) -- (1,492,061)
Distribution in excess of net investment income ..... -- -- -- --
Net realized gain on investments and foreign
currency related transactions ...................... -- (22,969,311) -- (1,215,906)
--------------------------------------------------------------------------
Total Distributions to Shareholders ................. -- (29,973,277) -- (2,707,967)
--------------------------------------------------------------------------
From Capital Share Transactions:
Net increase/(decrease) in net assets from capital
share transactions -- Note 7 ....................... 42,787,136 119,550,874 (1,306,161) 8,630,866
--------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets ................ 179,355,278 80,723,637 6,426,563 4,674,654
NET ASSETS:
Beginning of period .................................. 640,917,027 560,193,390 54,874,994 50,200,340
--------------------------------------------------------------------------
End of period* ....................................... $820,272,305 $640,917,027 $61,301,557 $54,874,994
==========================================================================
* Includes undistributed net investment income of: .... $ 3,465,264 $ 80,996 $ 627,050 $ 10,092
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
The Guardian The Guardian
Baillie Gifford Investment
International Quality
Fund Bond Fund
------------------------------ ----------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
June 30, December 31, June 30, December 31,
1995 1994 1995 1994
(Unaudited) (Audited) (Unaudited) (Audited)
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS
From Operations:
Net investment income ............................... $ 134,753 $ 62,143 $ 1,552,144 $ 1,244,317
Net realized gain/(loss) on investments and
foreign currency related transactions .............. (665,672) 465,449 162,929 (982,701)
Net change in unrealized appreciation/
(depreciation) on investments and
foreign currency related transactions .............. 917,086 (1,099,928) 2,966,726 (3,210,283)
--------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations ......................... 386,167 (572,336) 4,681,799 (2,948,667)
--------------------------------------------------------------------------
Distributions to Shareholders:
Net investment income ............................... -- (34,205) (1,552,144) (1,244,317)
Distribution in excess of net investment income ..... -- -- -- --
Net realized gain on investments and foreign
currency related transactions ...................... -- (265,963) -- (34,794)
--------------------------------------------------------------------------
Total Distributions to Shareholders ................. -- (300,168) (1,552,144) (1,279,111)
--------------------------------------------------------------------------
From Capital Share Transactions:
Net increase/(decrease) in net assets from capital
share transactions -- Note 7 ....................... 3,466,836 17,605,390 5,939,871 24,404,308
--------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets ................ 3,853,003 16,732,886 9,069,526 20,176,530
NET ASSETS:
Beginning of period .................................. 37,542,129 20,809,243 43,486,714 23,310,184
--------------------------------------------------------------------------
End of period* ....................................... $41,395,132 $37,542,129 $52,556,240 $43,486,714
==========================================================================
* Includes undistributed net investment income of: .... $ 134,753 $ 27,938 $ -- $ --
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
The Guardian The Guardian
Tax-Exempt Cash
Fund Management
Fund
------------------------------ ----------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
June 30, December 31, June 30, December 31,
1995 1994 1995 1994
(Unaudited) (Audited) (Unaudited) (Audited)
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS
From Operations:
Net investment income ............................... $ 409,124 $ 770,638 $ 1,610,312 $ 1,625,833
Net realized gain/(loss) on investments and
foreign currency related transactions .............. (54,617) (997,544) -- --
Net change in unrealized appreciation/
(depreciation) on investments and
foreign currency related transactions .............. 774,479 (1,586,569) -- --
--------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations ......................... 1,128,986 (1,813,475) 1,610,312 1,625,833
--------------------------------------------------------------------------
Distributions to Shareholders:
Net investment income ............................... (409,124) (770,638) (1,610,312) (1,625,833)
Distribution in excess of net investment income ..... -- -- -- --
Net realized gain on investments and foreign
currency related transactions ...................... -- (69,077) -- --
--------------------------------------------------------------------------
Total Distributions to Shareholders ................. (409,124) (839,715) (1,610,312) (1,625,833)
--------------------------------------------------------------------------
From Capital Share Transactions:
Net increase/(decrease) in net assets from capital
share transactions -- Note 7 ....................... 43,510 (2,514,385) 10,901,338 21,999,727
--------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets ................ 763,372 (5,167,575) 10,901,338 21,999,727
NET ASSETS:
Beginning of period .................................. 15,967,042 21,134,617 56,730,249 34,730,522
--------------------------------------------------------------------------
End of period* ....................................... $16,730,414 $15,967,042 $67,631,587 $56,730,249
==========================================================================
* Includes undistributed net investment income of: .... $ -- $ -- $ -- $ --
</TABLE>
See Notes to Financial Statements.
36 & 37
<PAGE>
Notes to
Financial Statements
June 30, 1995 (Unaudited)
The Park Avenue Portfolio
o The Guardian Park Avenue Fund
o The Guardian Asset Allocation Fund
o The Guardian Baillie Gifford International Fund
o The Guardian Investment Quality Bond Fund
o The Guardian Tax-Exempt Fund
o The Guardian Cash Management Fund
Note 1. Organization and Accounting Policies
The Park Avenue Portfolio (the Portfolio) is a diversified open-end
management investment company registered under the Investment Company Act of
1940, as amended (the 1940 Act), which is organized as a business trust under
the laws of the Commonwealth of Massachusetts. Shares of the Portfolio are
offered in six series; namely: The Guardian Park Avenue Fund (GPAF); The
Guardian Asset Allocation Fund (GAAF); The Guardian Baillie Gifford
International Fund (GBGIF); The Guardian Investment Quality Bond Fund (GIQBF);
The Guardian Tax-Exempt Fund (GTEF); and The Guardian Cash Management Fund
(GCMF). The series are collectively referred to herein as the "Portfolio Funds".
Prior to the close of business on February 12, 1993, GPAF and GCMF were
each separately organized as Massachusetts business trusts and registered under
the 1940 Act as diversified open-end management investment companies. As of the
close of business on February 12, 1993, GPAF and GCMF were reorganized as series
of the Portfolio, and GAAF, GBGIF, GIQBF and GTEF were also added as series.
Investments
Equity and debt securities listed on domestic or foreign securities
exchanges are valued at the closing sales prices on such exchanges, or, lacking
any sales, at the mean between closing bid and asked prices. Securities traded
in the over-the-counter market are valued using the last sales price, when
available. Otherwise, over-the-counter securities are valued at the mean between
the bid and asked prices or yield equivalents as obtained from one or more
dealers that make a market in the securities.
Certain debt securities may be valued each business day by an independent
pricing service ("Service") approved by the Board of Trustees. Debt securities
for which quoted bid prices, in the judgment of the Service, are readily
available and representative of the bid side of the market, are valued at the
mean between the quoted bid prices (as obtained by the Service from dealers in
such securities) and asked prices (as calculated by the Service based upon its
evaluation of the market for such securities). Other debt securities that are
valued by the Service are carried at fair value as determined by the Service,
based on methods which include consideration of: yields or prices of securities
of comparable quality, coupon, maturity and type; indications as to values from
dealers; and general market conditions.
Securities for which market quotations are not readily available, such as
certain mortgage-backed securities and restricted securities, are valued at fair
value as determined in good faith by or under the direction of the Portfolio
Funds' Board of Trustees.
Repurchase agreements are carried at cost which approximates market value
(see Note 5). Short-term securities held by the Portfolio Funds are valued on an
amortized cost basis which approximates market value but does not take into
account unrealized gains and losses. GCMF values its investments based on
38
<PAGE>
amortized cost in accordance with Rule 2a-7 under the 1940 Act. Investment
transactions are recorded on the date of purchase or sale.
Investing outside of the U.S. may involve certain considerations and risks
not typically associated with domestic investments, including the possibility of
political and economic unrest and different levels of governmental supervision
and regulation of foreign securities markets.
Net realized gain or loss on sales of investments is determined on the
basis of identified cost. Interest income, including amortization of premium and
discount, is recorded when earned. Dividends are recorded on the ex-dividend
date.
Foreign Currency Translation
Only GBGIF is permitted to buy international securities that are not U.S.
dollar denominated. GBGIF's books and records are maintained in U.S. dollars as
follows:
(1) The foreign currency market value of investment securities and other
assets and liabilities stated in foreign currencies are translated into U.S.
dollars at the current rate of exchange.
(2) Purchases, sales, income and expenses are translated at the rate of
exchange prevailing on the respective dates of such transactions.
The resulting gains and losses are included in the Statement of Operations.
It is not the practice of GBGIF to identify that portion of the results of
operations that arise as a result of changes in exchange rates from fluctuations
that arise from changes in market price during or at the end of a reporting
period except as noted below.
Realized foreign exchange gains and losses, which result from changes in
foreign exchange rates between the date on which a Portfolio Fund earns
dividends and interest or pays foreign withholding taxes or other expenses and
the date on which U.S. dollar equivalent amounts are actually received or paid,
are included in net realized gain on foreign currency related transactions.
Realized foreign exchange gains and losses which result from changes in foreign
exchange rates between the trade and settlement dates on security and currency
transactions are also included in net realized gain on foreign currency related
transactions. Net currency gains and losses from valuing investments and other
assets and liabilities denominated in foreign currency as of June 30, 1995 are
reflected in net change in unrealized appreciation or depreciation on foreign
currency related transactions based on the applicable exchange rate in effect at
the end of the period.
Forward Foreign Currency Contracts
GBGIF may enter into forward foreign currency contracts in connection with
planned purchases or sales of securities, or to hedge against changes in
currency exchange rates affecting the values of its investments that are
denominated in a particular currency. A forward exchange currency contract is a
commitment to purchase or sell a foreign currency at a future date at a
negotiated forward exchange rate. Fluctuations in the value of forward foreign
currency contracts are recorded for book purposes as unrealized gains or losses
on foreign currency related transactions by GBGIF. When a forward contract is
closed, GBGIF records a realized gain or loss equal to the difference between
the value of the forward contract at the time it was opened and the value at the
time it was closed. Such amount is recorded in net realized gain or loss on
foreign currency related transactions. GBGIF will not enter into a forward
foreign currency contract if such contract would obligate it to deliver an
amount of foreign currency in excess of the value of its portfolio securities or
other assets denominated in that currency.
Distributions to Shareholders
Dividends from net investment income are declared and accrued daily and are
paid monthly for GIQBF and GTEF, and declared and paid semi- annually for GPAF,
GAAF and GBGIF. Net realized short-term and long-term capital gains for these
Portfolio Funds will be distributed at least annually. Dividends from GCMF's net
investment income, which includes any net realized capital gains or losses, are
declared and accrued daily and paid monthly on the last business day of each
month.
39
<PAGE>
All dividends or distributions to the shareholders are recorded on the
ex-dividend date. Such distributions are determined in conformity with federal
income tax regulations. Differences between the recognition of income on an
income tax basis and recognition of income based on generally accepted
accounting principles may cause temporary overdistributions of net realized
gains and net investment income.
Federal Income Taxes
Each Portfolio Fund qualifies and intends to remain qualified to be taxed
as a "regulated investment company" under the provisions of the Internal Revenue
Code of 1986, as amended (Code), and as such will not be subject to federal
income tax on taxable income (including any realized capital gains) which is
distributed in accordance with the provisions of the Code. Therefore, no federal
income tax provision is required.
Reclassification of Capital Accounts
In accordance with a recently approved accounting pronouncement, GBGIF has
recorded a reclassification to its capital accounts. This reclassification has
no impact on the net asset value of GBGIF and was made to adjust undistributed
investment income for differences arising from the treatment of investment
income for book purposes and amounts recorded for dividends, which are
calculated on a tax basis. As a result, during the year ended December 31, 1994,
GBGIF reclassified $117,713 to paid-in capital from accumulated net investment
income. In addition, distributions in excess of net investment income for GPAF
represent prior years' differences between distributions calculated in
accordance with income tax regulations and net investment income. In addition,
amounts distributed for tax purposes in excess of net investment income have
been reflected as a temporary overdistribution of net investment income in the
Statement of Changes in Net Assets. These amounts reflect the effect of
temporary differences in the computation of net investment income for financial
reporting and tax purposes.
Note 2. Investment Advisory Agreements and Payments to Related Parties
Guardian Investor Services Corporation (GISC) provides investment advisory
services to each of the Portfolio Funds (except GBGIF) under an investment
advisory agreement. Fees for investment advisory services are established under
the terms of separate fee appendices to the agreement at an annual rate of .50%
of the average daily net assets of each Portfolio Fund, except for GAAF which
pays GISC at an annual rate of .65% of its average daily net assets. For the six
months ended June 30, 1995, GISC voluntarily assumed $111,896, $77,204 and
$107,499 of the ordinary operating expenses of GIQBF, GTEF and GCMF,
respectively.
GBGIF has an investment management agreement with Guardian Baillie Gifford
Ltd. (GBG), a Scottish corporation formed through a joint venture between The
Guardian Insurance & Annuity Company, Inc. (GIAC) and Baillie Gifford Overseas
Ltd. (BG Overseas). GBG is responsible for the overall investment management of
GBGIF's portfolio, subject to the supervision of the Portfolio's Board of
Trustees. GBG has entered into a sub-investment management agreement with BG
Overseas pursuant to which BG Overseas is responsible for the day-to-day
management of GBGIF. GBG continually monitors and evaluates the performance of
BG Overseas. As compensation for its services, GBG receives a management fee
computed at the rate of .80% of GBGIF's average daily net assets. One-half of
this fee (.40%) is payable by GBG to BG Overseas for its services. Payment of
the sub-management fee does not represent a separate or additional expense to
GBGIF.
For the six months ended June 30, 1995, aggregate sales commissions for the
purchase of capital shares were paid to GISC as compensation for services
rendered as follows:
Fund Commissions Fund Commissions
---- ----------- ---- -----------
GPAF ............ $1,121,908 GIQBF ............. $94,370
GAAF ............ 107,502 GTEF .............. 16,218
GBGIF ........... 94,236
Trustees who are not deemed to be "interested persons" (as defined in the
1940 Act) were paid $500 per Portfolio Fund's meeting of the Board of Trustees
40
<PAGE>
during the six months ended June 30, 1995. An annual fee of $1,000 per Portfolio
Fund (i.e., $6,000) was also paid to each such trustee during such period. The
aggregate remuneration paid by the Portfolio Funds to each of the trustees who
are not interested persons, amounted to $7,600 for the six months ended June 30,
1995. GISC pays compensation to the trustees who are interested persons, except
for Mr. Ferrara, who receives no compensation for his trusteeship.
Certain officers and trustees of the Portfolio Funds are affiliated with
GISC.
Note 3. Underwriting Agreement and Distribution Plan
The Portfolio has entered into an Underwriting Agreement with GISC pursuant
to which GISC serves as the principal underwriter for shares of the Portfolio
Funds. In addition, GISC and the Portfolio have entered into a Distribution Plan
and Agreement pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the Plan). Pursuant to the Plan, each Portfolio Fund pays GISC a monthly
distribution fee of up to .25% on an annual basis of its average daily net
assets. GPAF currently pays GISC .15%, on an annual basis, of its average daily
net assets. Under the Plan, GISC uses the fees received from the Portfolio Funds
to pay distribution expenses incurred during the fiscal year, including trail
commissions, the payment of advertising costs and expenses incurred to prepare,
printing and distribution of prospectuses to prospective investors.
Note 4. Investment Transactions
Purchases and proceeds from sales of securities (excluding short-term
securities) were as follows:
For the Six Months Ended June 30, 1995 (Unaudited)
--------------------------------------------------
GPAF GAAF GBGIF
------------ ------------ ------------
Purchases
Stocks and debt
obligations $223,250,303 $ 17,727,707 $ 12,159,250
U.S. Govern-
ment and gov-
ernment agency
obligations -- 51,573,038 --
Proceeds
Stocks and debt
obligations 195,735,268 21,403,726 8,856,165
U.S. Govern-
ment and gov-
ernment agency
obligations -- 33,013,329 --
GIQBF GTEF
------------ ------------
Purchases
Stocks and debt
obligations $ 23,998,194 $ 19,062,363
U.S. Govern-
ment and gov-
ernment agency
obligations 91,885,385 --
Proceeds
Stocks and debt
obligations 8,417,656 19,013,630
U.S. Government
and government
agency obligations 96,012,708 --
The cost of investments owned at June 30, 1995 for federal income tax
purposes was the same as for financial reporting purposes for the Portfolio
Funds. The gross unrealized appreciation and (depreciation) at June 30, 1995,
were as follows:
GPAF GAAF GBGIF
------------- ----------- -----------
Appreciation $ 210,625,185 $ 7,070,166 $ 4,603,550
(Depreciation) (8,626,802) (328,034) (1,529,500)
------------- ----------- -----------
Net Unrealized
Appreciation $ 201,998,383 $ 6,742,132 $ 3,074,050
============= =========== ===========
GIQBF GTEF
----------- -----------
Appreciation $ 1,154,759 $ 64,848
(Depreciation) (243,738) (440,616)
--------- -----------
Net Unrealized
Appreciation
(Depreciation) $ 911,021 $ (375,768)
========= ===========
Forward foreign currency contracts represent commitments to purchase or
sell a specified amount of foreign currency at a future date and at a future
price (Note 1). Risks may arise from the potential inability of a counterparty
to meet the terms of a contract and from unanticipated movements in the value of
41
<PAGE>
a foreign currency relative to the U.S. dollar.
At June 30, 1995, GBGIF had open forward foreign currency contracts, as
listed below, with net unrealized gains of $19,294, which are included in net
unrealized appreciation or depreciation on foreign currency related
transactions.
<TABLE>
<CAPTION>
Unrealized
Type of Expiration Current Appreciation/
Currency Contract Date Cost Value (Depreciation)
-------- -------- ---- ---- ----- --------------
<S> <C> <C> <C> <C> <C>
Australian Dollar Sell 07/05/95 $ 24,210 $ 24,082 $ 128
Deutsch Mark Sell 07/05/95 10,686 10,803 (117)
French Franc Sell 07/05/95 6,132 6,194 (62)
Hong Kong Dollar Sell 07/05/95 5,481 5,480 1
Japanese Yen Sell 07/05/95 3,339 3,365 (26)
Japanese Yen Sell 12/20/95 6,055,468 6,035,589 19,879
Malaysian Ringgit Sell 07/05/95 1,337 1,339 (2)
Pound Sterling Sell 07/05/95 56,179 56,555 (376)
Singapore Dollar Sell 07/05/95 6,049 6,059 (10)
Swedish Krona Sell 07/05/95 8,716 8,738 (22)
Swiss Franc Sell 07/05/95 10,824 10,923 (99)
Italian Lira Sell 07/05/95 4 4 0
-------
Total unrealized appreciation on open forward contracts $19,294
=======
</TABLE>
Note 5. Repurchase Agreements
The collateral for repurchase agreements is either cash or fully negotiable
U.S. Government securities. Repurchase agreements are fully collateralized
(including the interest earned thereon) and such collateral is marked-to-market
daily while the agreements remain in force. If the value of the collateral falls
below the value of the repurchase price plus accrued interest, the applicable
Portfolio Fund will require the seller to deposit additional collateral by the
next business day. If the request for additional collateral is not met, or the
seller defaults, the applicable Portfolio Fund maintains the right to sell the
collateral and may claim any resulting loss against the seller. The Board of
Trustees has established standards to evaluate the creditworthiness of
broker-dealers and banks which engage in repurchase agreements with each
Portfolio Fund. Repurchase agreements of more than seven days' duration,
together with investments in any other securities which are not considered
readily marketable by the Securities and Exchange Commission, are not permitted
if more than the applicable portion of a Portfolio Fund's net assets (either 10%
or 15% depending on the Portfolio Fund) would be so invested.
Note 6. Deferred Organization and Initial Offering Expenses
GAAF, GIQBF and GTEF incurred expenses of $16,418 each in connection with
their organization and registration. Such expenses were advanced by GISC and
were repaid by each of these Portfolio Funds upon the completion of their first
year of operations or when net assets reached $50 million. GBGIF's expenses of
$15,218 in connection with its organization and registration were advanced by
GISC and were repaid when GBGIF completed one year of operations. Organization
and initial offering expenses have been deferred and are being amortized on a
straight-line method over a five year period, beginning with the commencement of
the Portfolio Funds' operations in February, 1993.
42
<PAGE>
Note 7. Transactions in Portfolio Fund Shares
o The Guardian Park Avenue Fund
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1995 (Unaudited) Year Ended December 31, 1994
------------------------------------------------------------------------------------------------------------------------
Shares Amount Shares Amount
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 3,523,999 $103,690,721 6,037,382 $170,046,951
Shares issued to shareholders
in reinvestment of dividends
from net investment income and
net realized gain on sales of
investments -- -- 1,053,246 28,635,093
------------------------------------------------------------------------------------------------------------------------
3,523,999 103,690,721 7,090,628 198,682,044
Less shares repurchased (2,046,722) (60,903,585) (2,821,719) (79,131,170)
------------------------------------------------------------------------------------------------------------------------
Net Increase 1,477,277 $ 42,787,136 4,268,909 $119,550,874
========================================================================================================================
</TABLE>
o The Guardian Asset Allocation Fund
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1995 (Unaudited) Year Ended December 31, 1994
------------------------------------------------------------------------------------------------------------------------
Shares Amount Shares Amount
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 308,164 $ 3,383,788 1,512,956 $ 16,308,961
Shares issued to shareholders
in reinvestment of dividends
from net investment income and
net realized gain on investments -- -- 256,106 2,621,558
------------------------------------------------------------------------------------------------------------------------
308,164 3,383,788 1,769,062 18,930,519
Less shares repurchased (432,713) (4,689,949) (975,487) (10,299,653)
------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) (124,549) $(1,306,161) 793,575 $ 8,630,866
========================================================================================================================
</TABLE>
o The Guardian Baillie Gifford International Fund
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1995 (Unaudited) Year Ended December 31, 1994
------------------------------------------------------------------------------------------------------------------------
Shares Amount Shares Amount
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 777,789 $ 9,825,434 1,962,179 $ 26,239,004
Shares issued to shareholders
in reinvestment of dividends
from net investment income and
net realized gain on investments -- -- 22,460 293,682
------------------------------------------------------------------------------------------------------------------------
777,789 9,825,434 1,984,639 26,532,686
Less shares repurchased (501,068) (6,358,598) (675,602) (8,927,296)
------------------------------------------------------------------------------------------------------------------------
Net Increase 276,721 $ 3,466,836 1,309,037 $ 17,605,390
========================================================================================================================
</TABLE>
43
<PAGE>
o The Guardian Investment Quality Bond Fund
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1995 (Unaudited) Year Ended December 31, 1994
------------------------------------------------------------------------------------------------------------------------
Shares Amount Shares Amount
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 935,390 $ 8,764,604 3,110,719 $ 30,772,495
Shares issued to shareholders
in reinvestment of dividends
from net investment income and
net realized gain on investments 152,848 1,450,875 127,928 1,202,423
------------------------------------------------------------------------------------------------------------------------
1,088,238 10,215,479 3,238,647 31,974,918
Less shares repurchased (454,821) (4,275,608) (792,656) (7,570,610)
------------------------------------------------------------------------------------------------------------------------
Net Increase 633,417 $ 5,939,871 2,445,991 $ 24,404,308
========================================================================================================================
</TABLE>
0 The Guardian Tax-Exempt Fund
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1995 (Unaudited) Year Ended December 31, 1994
------------------------------------------------------------------------------------------------------------------------
Shares Amount Shares Amount
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 58,748 $ 546,989 258,142 $ 2,414,315
Shares issued to shareholders
in reinvestment of dividends
from net investment income and
net realized gain on investments 41,660 386,315 83,405 769,939
------------------------------------------------------------------------------------------------------------------------
100,408 933,304 341,547 3,184,254
Less shares repurchased (96,656) (889,794) (611,851) (5,698,639)
------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) 3,752 $ 43,510 (270,304) $ (2,514,385)
========================================================================================================================
</TABLE>
o The Guardian Cash Management Fund
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1995 (Unaudited) Year Ended December 31, 1994
------------------------------------------------------------------------------------------------------------------------
Shares Amount Shares Amount
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 60,868,462 $60,868,462 86,145,741 $ 86,145,741
Shares issued to shareholders
in reinvestment of dividends
from net investment income 1,573,539 1,573,539 1,577,440 1,577,440
------------------------------------------------------------------------------------------------------------------------
62,442,001 62,442,001 87,723,181 87,723,181
Less shares repurchased (51,540,663) (51,540,663) (65,723,454) (65,723,454)
------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) 10,901,338 $10,901,338 21,999,727 $ 21,999,727
========================================================================================================================
</TABLE>
44
<PAGE>
Note 8. Line of Credit
A $20,000,000 line of credit available to all of the Portfolio Funds has
been established with Morgan Guaranty Trust Company. The rate of interest
charged on any borrowings is based upon the prevailing Federal Funds rate at the
time of the loan plus .25% calculated on a 360 day basis per annum. For the six
months ended June 30, 1995, none of the Portfolio Funds borrowed against this
line of credit.
45
<PAGE>
Financial Highlights
o The Guardian Park Avenue Fund
<TABLE>
<CAPTION>
Selected data for a share of beneficial interest outstanding throughout the periods indicated:
====================================================================================================================================
Six Months
Ended Year Ended December 31,
June 30, 1995 ------------------------------------------------------------------------------------------
(Unaudited) 1994 1993 1992 1991 1990 1989 1988
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period $ 26.89 $ 28.63 $ 25.17 $ 22.23 $ 18.26 $ 21.56 $ 20.46 $ 18.63
------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment
income 0.13 0.31 0.50 0.45 0.65 0.68 0.92 0.60
Net realized and
unrealized gain/
(loss) on
investments 5.39 (0.72) 4.56 4.05 5.71 (3.28) 3.88 3.23
------------------------------------------------------------------------------------------------------------------------------------
Net increase/
(decrease) from
investment
operations 5.52 (0.41) 5.06 4.50 6.36 (2.60) 4.80 3.83
------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders
Dividends from net
investment income -- (0.31) (0.50) (0.44) (0.66) (0.70) (0.98) (0.55)
------------------------------------------------------------------------------------------------------------------------------------
Distributions from
net realized gain
on investments -- (1.02) (1.10) (1.12) (1.73) -- (2.72) (1.45)
------------------------------------------------------------------------------------------------------------------------------------
Total distributions -- (1.33) (1.60) (1.56) (2.39) (0.70) (3.70) (2.00)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $ 32.41 $ 26.89 $ 28.63 $ 25.17 $ 22.23 $ 18.26 $ 21.56 $ 20.46
------------------------------------------------------------------------------------------------------------------------------------
Total return* 20.53% (1.44%) 20.28% 20.48% 35.16% (12.21%) 23.66% 20.78%
====================================================================================================================================
Ratios/supplemental data:
Net assets, end of
period (000's
omitted) $820,272 $640,917 $560,193 $335,660 $270,095 $216,457 $228,190 $176,000
Ratio of expenses
to average net
assets 0.83%** 0.84% 0.81% 0.68% 0.67% 0.69% 0.70% 0.69%
Ratio of net
investment income
to average net
assets 1.00%** 1.15% 1.89% 1.94% 2.96% 3.51% 4.01% 2.82%
Portfolio
turnover 29% 54% 46% 64% 57% 47% 47% 58%
====================================================================================================================================
</TABLE>
* Excludes effect of sales load.
** Annualized
Year Ended December 31,
----------------------------------------------------
1987 1986 1985
--------------------------------------------------------------------------------
Net asset value,
beginning of
period $ 20.74 $ 21.20 $ 18.17
--------------------------------------------------------------------------------
Income from investment operations
Net investment
income 0.47 0.35 0.44
Net realized and
unrealized gain/
(loss) on
investments 0.20 3.33 5.12
--------------------------------------------------------------------------------
Net increase/
(decrease) from
investment
operations 0.67 3.68 5.56
--------------------------------------------------------------------------------
Distributions to shareholders
Dividends from net
investment income (0.60) (0.33) (0.49)
--------------------------------------------------------------------------------
Distributions from
net realized gain
on investments (2.18) (3.81) (2.04)
--------------------------------------------------------------------------------
Total distributions (2.78) (4.14) (2.53)
--------------------------------------------------------------------------------
Net asset value,
end of period $ 18.63 $ 20.74 $ 21.20
--------------------------------------------------------------------------------
Total return* 2.95% 18.38% 32.98%
================================================================================
Ratios/supplemental data:
Net assets, end of
period (000's
omitted) $157,045 $136,243 $ 89,617
Ratio of expenses
to average net
assets 0.68% 0.71% 0.70%
Ratio of net
investment income
to average net
assets 2.08% 1.79% 2.48%
Portfolio
turnover 50% 48% 80%
================================================================================
46
<PAGE>
Financial Highlights
o The Guardian Cash Management Fund
<TABLE>
<CAPTION>
Selected data for a share of beneficial interest outstanding throughout the periods indicated:
====================================================================================================
Six Months
Ended
June 30, 1995 Year Ended December 31,
(Unaudited) 1994 1993 1992 1991 1990
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
----------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income 0.026 0.034 0.021 0.030 0.053 0.076
----------------------------------------------------------------------------------------------------
Distributions to shareholders
Dividends from net
investment income (0.026) (0.034) (0.021) (0.030) (0.053) (0.076)
----------------------------------------------------------------------------------------------------
Net asset value,
end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
----------------------------------------------------------------------------------------------------
Total return 5.19% 3.48% 2.15% 3.06% 5.70% 7.91%
====================================================================================================
Ratios/Supplemental data:
Net assets, end of period
(000's omitted) $67,632 $56,730 $34,731 $37,780 $44,054 $47,143
Ratio of expenses to
average net assets 0.85%* 0.87% 1.02% 0.70% 0.67% 0.65%
Ratio of expenses
subsidized by GISC 0.35%* 0.50% 0.42% 0.44% 0.35% 0.41%
Ratio of net investment
income to average
net assets 5.17%* 3.54% 2.13% 3.01% 5.30% 7.57%
====================================================================================================
</TABLE>
* Ratios are annualized.
** Not annualized.
<TABLE>
<CAPTION>
==========================================================================================
Three
Months
Ended
Dec. 31 Year Ended September 30,
1989 1988 1988 1987 1986
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------------------------------------------------------------------------------------------
Income from investment operations
Net investment income 0.086 0.024 0.066 0.053 0.063
------------------------------------------------------------------------------------------
Distributions to shareholders
Dividends from net
investment income (0.086) (0.024) (0.066) (0.053) (0.063)
------------------------------------------------------------------------------------------
Net asset value,
end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------------------------------------------------------------------------------------------
Total return 8.60% 2.40%** 6.60% 5.30% 6.30%
==========================================================================================
Ratios/Supplemental data:
Net assets, end of period
(000's omitted) $33,821 $21,961 $20,603 $19,618 $20,451
Ratio of expenses to
average net assets 0.65% 1.00%* 1.00% 1.00% 1.00%
Ratio of expenses
subsidized by GISC 0.52% 0.38%* 0.28% 0.35% 0.22%
Ratio of net investment
income to average
net assets 8.56% 7.63%* 6.32% 5.34% 6.36%
==========================================================================================
</TABLE>
47
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Selected data for a share of beneficial interest outstanding throughout the periods indicated:
====================================================================================================================================
The Guardian
The Guardian Baillie Gifford
Asset Allocation Fund International Fund
------------------------------------------------------------------------------------------------------------------------------------
Period from Period from
Six Months February 15, Six Months February 15,
Ended Year Ended 1993* to Ended Year Ended 1993* to
June 30, 1995 December 31, December 31, June 30, 1995 December 31, December 31,
(Unaudited) 1994 1993 (Unaudited) 1994 1993
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.23 $ 10.98 $ 10.00 $ 13.01 $ 13.19 $ 10.00
------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income/(loss) 0.12 0.28 0.19 0.03 0.01 (0.02)
Net realized and unrealized gain/(loss)
on Investments and foreign currency
related transactions 1.35 (0.52) 1.02 0.05 (0.09) 3.32
------------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) from
investment operations 1.47 (0.24) 1.21 0.08 (0.08) 3.30
------------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders
Dividends from net investment income -- (0.28) (0.18) -- (0.01) --
Distributions from net realized gain
on investments and foreign currency
related transactions -- (0.23) (0.05) -- (0.09) (0.11)
------------------------------------------------------------------------------------------------------------------------------------
Total Distributions -- (0.51) (0.23) -- (0.10) (0.11)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.70 $ 10.23 $ 10.98 $ 13.09 $ 13.01 $ 13.19
------------------------------------------------------------------------------------------------------------------------------------
Total return** 14.37% (2.13)% 12.16% 1.24% (0.55)% 32.98%
====================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000's omitted) $61,302 $54,875 $50,200 $41,395 $37,542 $20,809
Ratio of expenses to average net assets 1.29%+ 1.30% 1.29% 1.86%+ 1.91% 2.35%
Ratio of net investment income/(loss) to
average net assets 2.15%+ 2.72% 2.07% 0.68%+ 0.20% (0.21)%
Ratio of expenses subsidized by GISC -- -- -- -- -- --
Portfolio turnover 115% 216% 165% 24% 33% 9%
====================================================================================================================================
</TABLE>
+ Annualized
* Commencement of operations.
** Excludes effect of sales load.
<TABLE>
<CAPTION>
====================================================================================================================================
The Guardian
Investment Quality The Guardian
Bond Fund Tax-Exempt Fund
------------------------------------------------------------------------------------------------------------------------------------
Period from Period from
Six Months February 15, Six Months February 15,
Ended Year Ended 1993* to Ended Year Ended 1993* to
June 30, 1995 December 31, December 31, June 30, 1995 December 31, December 31,
(Unaudited) 1994 1993 (Unaudited) 1994 1993
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.12 $ 10.04 $ 10.00 $ 8.86 $ 10.20 $ 10.00
------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income/(loss) 0.31 0.46 0.37 0.23 0.40 0.34
Net realized and unrealized gain/(loss)
on Investments and foreign currency
related transactions 0.61 (0.90) 0.18 0.41 (1.30) 0.40
------------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) from
investment operations 0.92 (0.44) 0.55 0.64 (0.90) 0.74
------------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders
Dividends from net investment income (0.31) (0.46) (0.37) (0.23) (0.40) (0.34)
Distributions from net realized gain
on investments and foreign currency
related transactions -- (0.02) (0.14) -- (0.04) (0.20)
------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.31) (0.48) (0.51) (0.23) (0.44) (0.54)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.73 $ 9.12 $ 10.04 $ 9.27 $ 8.86 $ 10.20
------------------------------------------------------------------------------------------------------------------------------------
Total return** 10.23% (4.50)% 4.13% 7.23% (8.98)% 5.55%
====================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000's omitted) $52,556 $43,487 $23,310 $16,730 $15,967 $21,135
Ratio of expenses to average net assets 0.75%+ 1.46% 1.42% 0.75%+ 1.09% 1.36%
Ratio of net investment income/(loss) to
average net assets 6.49%+ 4.94% 3.68% 5.00%+ 4.26% 3.35%
Ratio of expenses subsidized by GISC 0.42%+ -- -- 0.94%+ 0.47% --
Portfolio turnover 241% 186% 167% 116% 107% 108%
====================================================================================================================================
</TABLE>
48 & 49
<PAGE>
o Trustees
Arthur V. Ferrara, CLU. -- Chair
John C. Angle
Frank J. Fabozzi, Ph.D.
Leo R. Futia, CLU
William W. Hewitt, Jr.
Sidney I. Lirtzman, Ph.D.
Robert G. Smith, Ph.D.
o Officers
Frank J. Jones -- President
Charles E. Albers
Michele S. Babakian
Joseph A. Caruso
Alexander M. Grant, Jr.
Raymond J. Henry
Thomas R. Hickey, Jr.
Ann T. Kearney
R. Robin Menzies
Nikolaos D. Monoyios
John B. Murphy
Frank L. Pepe
Richard T. Potter, Jr.
<PAGE>
o Investment Adviser
& Distributor
Guardian Investor Services
Corporation(R)
201 Park Avenue South
New York, New York 10003
o Custodian of Assets
State Street Bank and Trust
Company
Custody and Shareholder
Services Division
P.O. Box 1713
Boston, Massachusetts 02102
o Shareholder Servicing Agent &
Dividend Paying Agent for State
Street Bank and Trust Company
National Financial Data Services
P.O. Box 419611
Kansas City, Missouri 64141-6611
This report is authorized for distribution to the public only when accompanied
or preceded by a current prospectus for the funds which comprise The Park Avenue
Portfolio.
EB-011566 6/95
